ML20055J327

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Decommissioning Rept of Philadelphia Electric Co
ML20055J327
Person / Time
Site: Peach Bottom  Constellation icon.png
Issue date: 07/20/1990
From: Rimerman M
PECO ENERGY CO., (FORMERLY PHILADELPHIA ELECTRIC
To:
Shared Package
ML18095A378 List:
References
NUDOCS 9008020099
Download: ML20055J327 (33)
v • d • e


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BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION In The Matter Of Philadelphia Electric Company Public Service Electric & Gas Company Docket Nos. 50-277 Atlantic City Electric Company 50-278 Delmarva Power & Light Company (Peach Bottom Atomic Power Station Units 2 & 3)

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

1) Peach Bottom Atomic-Power Station Units 2 and 3 are owned jointly by the Company (42.49%), Public Service Electric & Gas Company (42.49%), Atlantic City Electric Company (7.51%) and Delmarva Power & Light Company (7.51%).

The Company has based this Decommissioning Report on satisfying its decommissioning' financial assurance obligation to the extent of its 42.49% ownership interest in Peach Bottom Units 2 & 3.

The other Peach Bottom owners are filing separate Reports for their respectjve ownership interests.

2) The Company hereby certifies that financial assurance for decommissioning Peach Bottom Unit 2 is provided in the amount of 42.49% of $173.9 million or $73.9 million.

The calculation of this amount is set forth in Exhibit A-1 and was performed in accordance with the formula set forth in 10CFR S50.75(c).

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3) The Company hereby certifies that. financial assurance for the decommissioning of Peach Bottom Unit 3 is provided in the amount of 42.49%'of $173.9 million or $73.9 million.

The~ calculation of this amount is set forth in Exhibit A+2 and was performed in accordance with the formula set forth in 10CFR 550.75(c).

I'

4) The Company will provide financial assurance for decommissioning Peach Bottom Unit 2 by making payments at least annually into an. external sinking fund which will be either a decommissioning escrow account or a nuclear decommissioning trust fund qualified under section 468A of the Internal Revenue Code of 1986.

5)'The Company presently makes-and will continue to make-.

payments for Peach Bottom Unit 2 into a decommissioning escrow account establ.ished pursuant to a December 31, 1984; Escrow Agreement

'which is the successor to a previous Escrow Agreement established for'the same purpose.

A true and correct copy.of the 1984 Escrow

~

Agreement is attached hereto as-Exhibit B-1.

As of May 31., 1990, the Peach Bottom Unit 2 Decommissioning Escrow Account had a balance of-$5,529,000.

o 6 ): The Company presently makes and will continue to make o

payments for Peach Bottom Unit 2 into a qualified nuclear decommissioning trust fund which was established by an instrument P

dated March 14, 1988, a true and correct copy of which is attached hereto'and marked Exhibit B-2.

As of May 31, 1990, the Peach Bottom 1

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t Unit 2 qualified nuclear decommissioning trust fund had'a-balance of

.47,791,000.

A certification of the authority of the signatory to execute the. escrow and t rust instruments on behalf of the Company is attached hereto and marked Exhibit B-3.

i 7).The Company will provide financial assurance for

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decommissioning Peach Bottom Unit 3 by making payments at least annually into an external sinking fund which will be either a decommissioning escrow account or a nuclear decommissioning trust fund qualified under section 468A of the Internal Revenue Code of 1986.

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8) The Company presently makes and will continue to make payments for Peach Bottom Unit 3 into a decommissioning escrow i

account-established by a December 31, 1984 Escrow Agrewaant'which is i

the successorito a previous Escrow Agreement established for the same purpose.

'A true and correct copy of the 1984 Escrow Agreement 1

is-attached hereto as Exhibit B-1.

As of May 31, 1990, the Peach f

Bottom Unit 3 Decommissioning Escrow Account had a balance of' i

$5,606,000.

9) The Company presently makes and will continue to make payments for Peach Bottom Unit 3 into a qualified' nuclear decommissioning' trust; fund which was established by an instrument dated March"14, 1988, a true and correct copy of which_is attached' hereto and marked Exhibit B-4.

As of May 31, 1990, the Peach Bottom l

Unit 3 trust fund had a balance of $7,790,000.

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' 10) The Company anticipates that the vast majority of future payments to satisfy its decommissioning financial assurance obligations for Peach Bottom Units 2 and 3 will be made into the l

qualified decommissioning trust funds.

The only circumstance under which payments will be made into an escrow account would arise when i

the total amount of a contribution in a given year would exceed the j

amount which the Company may pay into the qualified decommissioning trust fund without jeopardizing the qualification of the trust fund Lunder Section 468A of the Internal Revenue Code of 1986.

In this case, the excess of the decommissioning payment would be deposited

'into the escrow account.

13)'-Schedules'of payments for implementing the method of.

providing assurance of the availability of funds.for decommissioning Peach Bottom Units 2 and 3. including the; application of previously made< payments, are set forth in Exhibits <C-.1 and C-2,..respectively.

12)

The Company will annually adjust the certification amounts provided in Paragraphs 2 and 3 above using the formula in y

$50.75(c)(2).

Adjustments to the schedules of payments set forth in Exhibits C-1 and C-2 will be made at least once every five years to-reflect the adjustments to the certification amounts made in prior years.

t PHILADELPHIA ELECTRIC COMPANY 7

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BY lll Al(/5tL

'Vice President j/Y U

DATED l 70

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  • EXH181T A-1 (b

Surarnary of ' Data,' Forenelas and Sources Used to Calculate L

NRC Minirnutt Decorntnissioning Cost.

Peach Bottorn Atornic Power Station, Unit.2 t',

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Base. Cost

$135MM for P ) 3400Mwt; ($104 + 0.009P)MM for I,

1200 (

P ( 3400 Mwt t'

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L Base Cost Escalation Escalation Factor = 0.G5L + 0.13E + 0.22B i.

where L, E,

and B are escalation factors for labor energy and weste burial charges, respectively.=

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Energy Cost Escalation E = 0.23x(3',/P, g+ 0 77x(g,/F,), price g

g where

- an F are produce indexes for power.

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and fuel, respectively.

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Labor, L 1986 = 130.5 K

9/1989.= 158.3 Escalation Factor = 1.213027

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Energy,:E 1986LP=111.91 F=Pd.

12/1989.P = 115.411F = 68.1 I.,,'

Escalation Facte.r.=.0.876670-ic Burial, B: 1986 = 1

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12/1989 --1.814 Escalation Factor = 1.814 L

Base Cost Escalation = 1.301515 Base Costa Peach Bottorn Unit 2-

$133,637,000 at 3293 Mwt.

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-Escalated' Cost: Peach > Bottorn Unit 2 - $173,931,000 h

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Philadelphia Electric Ownership Portion of Escalated Cost' 42.49%'x $173,931,000 = $73,903,282 l-0'

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.NRCfRegulatory Guide DG-1003, " Assuring the Availability of Funds:

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for. Decorntnissioning Nuclear Reactors"

'l Mont hly l Labor ; Review, "Ernp l oyrnent Cost..- Index, ': Privat e Nonf arrn l

i Workers, Cornpensat ion" - Northwast Region Septernber 1989

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e-1 EXHIBIT'A-2 Ji

- Surnmary of Data, Fortnulas and Sources Used to Calculate

'c-NRC Vinimurn Decom:nissioning Cost j

Peach Bottom Atornie Power Station, Unit 3.

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t Base Cost.

$135MM for P ) 3400MwtI ($104 + 0.009P)MM'for l

3 1200 ('P ( 3 tic Mwt-

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i BaseLCost Escalation l

Escalation Factor = 0.GSL +'O.13E + 0.22B where L, E,'and B are escalation factors forilabor energy and waste-burial charges,'respectively.

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Energy Cost Escalation i

.E = 0. 23x (Ng/P,,)gY are pro,F /F..)-+ 0.77x(dUceEfheice-indexesLfor power P

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and fuel, respectively.

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_'t Labor, L: -1986 = 130.5

.9/1989.= 158.3 Escalation Feetor = 1.213027' 1986 P=111.9; F=82 Energy,'E

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12/1989 P.=

115.4; F = 68.1 p

Escalation Factor = 0.876670 Burial, B: 1986 = 1 B

12/1989 = 1.814-Escalation Factor = 1.814 i

Base Cost Escalation = 1.301515 F.

y Base' Costa Peach Bottorn Unit 3 -

$133,637,000 at 3293 Mwt y

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Escalated Cost s ' Peach Bottorn Un, 3

.$173,931,000 Philadelphia Electric Ownership Portion of Escalated Cost' 42.49% x $173,931,000 = $73,903,282 I

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EXHIBIT B-l~

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  • bk!$ f e :ve ESCROW AGREEMENT FOR QUALIFIED DECOMMISSIONING FUND First Pennsylvania Bank N. A.

is hereby directed

-to establish a ' Qualified Decommissioning Fund in the name of Philadelphia Electric Company, and to deposit therein and hold in ~ escrow such monies as shall be transmitted to it from time to time for this purpose.by Philadelphia Electric Company.

It-is intended.that this Fund shall comply with Section 468 A of thel Internal Revenue Code of '.954 to the fullest extent possible.

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

First Pennsylvania Bank N. A.

shall divide the Fund h,g into subaccounts, with age,parate subaccount to be created for each nuclear generating Mdat which is to be decommissioned in the future by Philadelphia Electric Company.

First Pennsylvania Bank N.A.

shall invest all monies in the Fund, including income on the investments, and shall otherwise deal with the Fund as follows:

1) Select and invest all-funds in (tax free) securities issued by the Commonwealth of Pennsylvania, its political subdivisions,

agencies and authorities, with the limita-tions that the securities purchased should at a minimum be rated Single A with maturi-ties in the 8 to 12 year range.

2) Purchases should be in securities whose price is near par rather than disco".nted.

This approach is sBggested in' order to minimize the amount of capital gains taxes to be paid '

on appreciation.

3) Provide safekeeping for securities in the account.
4) Register securities in nominee name or maintain in bearer form.
5) Collect the principal of all securities as they mature, are redeemed or sold.
6) Make transfers from income to principal of the fund account f or rei.ve s _ ment.

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7) Maintain a record of securities held including.

all-purchases and sales thereof, and furnish ~the Philadelphia Electric Company Treasurer or Assis -

tant Treasurer with a monthly ' statement of receipts

.and' disbursements of principal and income, and.

annually, a list of securities held in the account including approximate market. values.

8) ' Supply the Treasurer or Assistant Treasurer. of Philadelphia Electric Company, confirmaticns of trades _as soon as possible after trade is completed.

i

9) Collect all interest and other income from the securities held under this. agreement.
10) Except for taxes, bank fees and other expenses associated with the operation of the fund account First Pennsylvania Bank N. A. will permit funds to -

be paid.out of the account only upon presentation-by the Philadelphia Electric Company to'First

' Pennsylvania Bank N.A. of a certificate signed by its' President or one of its Vice Presidents and.

its Treasurer or an Assistant Treasurer requesting such payment, i

Philadelphia Electric Company will indemnify.and hold harmless the First Pennsylvania Bank N.A.

from and against all-liabilities, losses and other expenses arising in~any way connected with its reliance upon-the above mentioned certificate, and First Pennsylvania Bank :N. A.

shall have no duty to verify. signatures on

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such certificate.

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

S6.50 per $1,000, on the first

$1,000,000.

S5.00 per $1,000 on the next

$5,000,000.

S4.00 per $1,000, on the next

$10,000,000.

S2.50 per $1,000, on the balance.

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

m In the event any special services are required, First Pennsylvania

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- Bank.N; A.'!- shallTbe ' compensated in 'accordance with a separate'

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-- ag r eement.

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If It :is understood-that' this Agreement -may be.

t modified -by mutual consent, in writing, and" this arrangement.

.may1be terminated: by either party by= giving written : notice 'to.

t the other party..-

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p-b PHILADELPHIA ELECTRIC COMPANY b

WI 87 iMn/hv'

. (Signatur e ) -

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Treasurer-

- (Title)'

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2301 Market Street i

Philadelphia, Pa.-

19101 Y

ACCEPTED,

.I FIRST1 PENNSYLVANIA BANK N.A.

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\\WC V t y'l{ fC N.16-VKL YreSIwr

.sDate' l 2. '71 h

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EXilIBIT B-2 i

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.t PEACH. BOTTOM UNIT 2 QUALIFIED NUCLEAR DECOMMISSIONING FUND PHILADELPHIA ELECTRIC. COMPANY ("PECo"),. intending to be legally bound, does hereby establish the following trust, to be known as the Peach Bottom Unit 2 Qualified Nuclear Decommissioning Fund (the " Fund"), and PECo does hereby name FIRST PENNSYLVANIA BANK N.A. as Trustee thereof:

I.

GENERAL DEFINITIONS A.

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

provisions of succeeding law), and the final Treasury Regulations issued thereunder-(hereinafter collectively referred to as "S468A"):

" administrative costs and other incidental ~ expenses"

" nuclear power plant"

" nuclear decommissioning fund"

" nuclear decommissioning costs" 3

"self-dealing" B.

The words " written instrument" shall refer to any instrument issued to Trustee by PEco making appropriate

c,3 si y

t ref'erence to this Fund and believed in good faith by the Trustee to be signed by any of the persons authorized to act on

_PECo's behalf hereunder, j

C.

The phrase "as "PEco may direct" or any f

similar_ language referring to instructions which PECo may give, shall include an oral communication to Trustee by a person or persons believed in good faith by the Trustee to be any of the persons authorized to act on PECo's behalf hereunder.

D.

For purposes of paragraphs B and C hereof, I

PECo shall provide to Trustee a written instrument stating the names of persons authorized from time to time to act on-PEco's behalf hereunder, and containing specimen signatures'of such authorized persons.

Until notified in writing to the contrary j

by PEco,. Trustee shall be fully protected in relying upon and acting in accordance with any oral or written notice, instruction, direction, certificate or other communication believed by Trustee to be genuine and to be signed or given'by any such authorized person and Trustee shall be under no duty to make any investigation or inquiry as to the trath or

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accuracy of any statement contained therein or to the authority of the person signing or giving such communication.

II.

PURPOSE PECo is the owner of an undivided 42.49% interest in the nuclear power plant known as Peach Bottom Atomic Power t !-

6

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Station,-Unit 2 ("PB Unit 2") and is establishing this Fund as the nuclear decommissioning fund for PB Unit 2, satisfying the qualification requirements under S468A, for the exclusive purpose of providing funds contemplated by PECo as necessary or appropriate for decommissioning PB Unit 2.

This Fund is being established in order to avail PECo of certain Federal income tax benefits arising under 5468A, and shall be operated and maintained in a manner consistent therewith.

III.

TRUST ASSETS

-For the purpose hereinabove described,- PECo shall from time to time transfer and assign to this Fund, by written

' instrument, such property as PECo deems appropriate, to be held,: administered and distributed by Trustee in accordance with the provisions hereof, IV.

DISTRIBUTIONS OF INCOME AND PRINCIPAL The income and principal of this Fund shall, except as provided in paragraph C hereof, be used exclusively for the decommissioning costs of PB Unit 2 as identified from time to time by PEco.

In connection therewith, income and principal may also be used to pay the administrative costs and other incidental expenses of this Fund.

F i

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A.

Until otherwise directed by PECo, Trustee:

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

B.,

To the extent of the assets held in the Fund, Trustee shall pay nuclear decommissioning costs of PB Unit 2 to such persons, in such amounts, at such times and in I

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

C.

Trustee shall distribute to PECo, to such' persons, in such amounts, at such times and in such manner as PEco'may from time to~ time direct, any assets of this Fund determined by PECo to be unnecessary to effectuate-the purpose of this Fund.

V.

POWERS OF TRUSTEE Trustee shall have the following powers in addition to those vested in it by~1aw and granted to it elsewhere hereunder, which powers shall continue until actua11 distribution of the assets of this Fund:

1.

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

,4 9

of'such' assets as PECo may direct from time to time, but only in the manner permitted under 5468A.

2.

To sell or exchange any asset held hereunder on such terms and conditions and in such manner as PECo may direct from time to time.

3.

To hold or register assets in street name, the name of its nominae er in bearer form, or by any other title holding device, without disclosing any fiduciary relationship.

4.

To retain and pay from the Fund attorneys, accountants and investment counsel for advice and other professional. services.

5.

To compromise any-claims, including claims for taxes, by or against the Fund on such terms and conditions and in'such manner as PECo may direct from time to time.

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

VI.

DISQUALIFICATION This Fund shall not engage in, and Trustee shall not permit this Fund to engage in, any acts of self-dealing or 1, - -

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any other acts that are contrary to the purpose or. stated terms of this Fund.

VII.

SITUS This Fund has been executed in the Commonwealth of Pennsylvania, which is hereby designated as the Fund's situs, and all questions pertaining to the validity, construction and administration of this Fund shall be determined in accordance with the laws of Pennsylvania, regardless of.the jurisdiction in which the Fund may at any time actually be administered, provided, however, that this Fund shall at all. timer be maintained in the United States.

VIII.

TRUSTEE PECo does hereby appoint FIRST PENNSYLVANIA BANK N.A. as Trust (t aereunder, and it shall receive compensation for the performance of its services hereunder in accordance with the agreement entered into with PECo contemporaneous 1y herewith relating to such compensation.

All such compensation shall constitute a charge against the Fund until paid.

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

PECo shall have the right at any time and from time to time to remove the Trustee then serving

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i hereunder and appoint a successor Trustee to serve.

Each such successor shall have the same powers, rights, duties,

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discretions and immunities as are conferred upon the original Trustee-hereunder.

No Trustee serving hereunder shall be required to

' file bond or enter security in any jurisdiction, any rule or 4

law to the contrary notwithstanding.

l-Trustee shall not be responsible for the sufficiency of the trust assets to effect the decommissioning of PB Unit 2, for the use or application of any monies or property held in the Fund when disbursed in conformity herewith, or for the qualification of any costs, fees or 1:

expenses paid from the Fund as nuclear' decommissioning. costs

.l l-l for purposes'of S468A, Trustee shall not be liable, except for gross negligence,.for any acts, omissions or defaults of any agent appointed or selected with reasonable care: Trustee shall also not be liable _for any acts taken or not taken at the direction of or upon the instruction of PECo, whether such directions or instructions are delivered orally or by written instrument, IX.

POWER OF AMENDMENT AND REVOCATION PECo does hereby reserve the right, at any time L

or times, by written instrument, to alter, amend or revoke this l'

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- - - - - - _ _ - - - - - - _ _ - - ~ _ - _ - - - - - - - -,, - - - - - - -

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3..c Fund in whole or in part; provided, however, that no such instrument shall modify the rights, duties or immunities of the Trustee without its consent.

IN WITNESS WHEREOF, PECo has caused its duly authorized officers to sign and seal this instrument this I44 day of March, 1988.

Attest:

PHILADELPHIA ELE A IC COMPANY N[c/24ZL_

V, N 'y ed J By:

Morton W. Rimerman

Title:

_ h Secretary

Title:

Vice President

~(Corporate Seal)

Intending to be laqally bound, Trustee does hereby accept the trust hereinabove set forth and agrees-to carry out l

its provisions.

x Attest:

FIRST PENNS ANIA BANR'NsA.'s

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pw MLLIAM PANTEUDES

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Title:

ASST SECRETARY Ti e:

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CONMONWEALTH OF PENNSYLVANIA :

SS.

COUNTY OF PHILADELPHIA On the /[dayofMarch,1988, before me, the subscriber, a Notary Public in and for the Commonwealth and County aforesaid, personally appeared the above-named Morton W.

Rimerman and L. S. 3 /,r d e known to me or satisfactorily proved to be the Vice President and Ase4e*** Secretary of Philadelphia Electric Company, and in due form of law 1

l acknowledged the establishment ~of the Peach Bottom Unit 2 i3 Qualified Nuclear Decommissioning Fund cin behalf of l

Philadelphia Electric Company and desired that the same might l

be recorded as-such, l

WITNESS my hand-and seal the day and year aforesaid, blY$

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Notary Puh'l/ic My Commission expires:

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

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

Rimerman as Treasurer of the Company to execute on behalf of the Company a certain Escrow Agreement for Qualifying Decommissioning Fund dated December 31, 1984 for the Company's nuclear units, the authority of M. W. Rimerman as a Vice President of the Company to execute on behal of the Company certain instruments dated March 14, 1988 relauing to the establishment of Nuclear-Decommissioning Trust Funds for Peach Bottom Units-2 and-3, Salem Units 1 and 2, and Limerick Unit 1 and the authority of M. W. R1 merman as a Vice President of the Company to execute on behalf of the Company for Limerick Unit 2 a similar instrument for such purpose.

/s/

C. A. McNeill, Jr.

President and Chief Operating Officer WITNESS, my hand and the seal of Philadelphia Electric Company this.2Nday of g

1990.

'fn h.

S/O'A Assistant Secretary l

Exhibit B-3

DLHIBfT B-4

..)c.

I PEACH BOTTOM UNIT 3 QUALIFIED NUCLEAR DECOMMISSIONING FUND l

PHILADELPHIA ELECTRIC COMPANY ("PECo"), intending to be legally bound, does hereby establish the following trust, to be known as the Peach Botte.n Unit 3 Qualified Nuclear Decommissioning fund 'che " Fund"), and PECo does hereby name

'FIRST PENNSELVANIA 9ANK N.A. as Trustee thereof:

I.

JENERAL DEFINITIONS A.

The following terms which are used herein shall have the same meaning as used in Section.468A, of the Internal Revenue Code of 1986, as amended (or the corresponding provisions of succeeding law), and the final Treasury Regulations issued thereunder (hereinafter collectively referred to as "S468A"):

" administrative costs and other incidental expenses"

" nuclear power plant"

" nuclear decommissioning ^ fund"

" nuclear decommissioning costs" "self-dealing" B.

The words " written instiument" shall refer to any instrument issued to Trustee by PECo making appropriate

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reference to this Fund and believed in good faith by the

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Tru:tte to be signed by any of the persons authorized to act on PECo's behalf hereunder.

C.

The phrase "as "PECo may direct" or any similar language referring to instructions which PEco may give, shall include an oral communication to Trustee by a person or persons believed in good f aith by the Trustee to be any of the persons h'tthorized to act on PECo's behalf hereunder.

D.

For purposes of paragraphs B and C hereof, PECo shall provide to Trustee'a written instrument stating the names of persons authorized from time to time to act on PECo's behalf hereunder, and containing specimen-signatures of such authorizet persons.

Until notified in writing to the contrary by PECo, Trustee shall be fully protected in relying upon and acting in accordance with any oral or written notice, instruction, direction, certificate or other communication

-believed by Trustee to be genuine and to be signed or given by any such authorized person and Trustee shall be under no duty to make any investigation or inquiry as to the truth or accuracy of any statement contained therein or to the authority of the person signing or giving_such communication.

II.

PURPOSE PECo is the owner of an undivided 42.49% interest in the nuclear power plant known as Peach Bottom Atomic Power.

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Station, Unit 3 ("PB Unit 3") and is establishing this Fund as the nuclear decommissioning fund for PB Unit 3, satisfying the l

qualification requirements under S468A, for the-exclusive purpose of providing funds contemplated by PECo as necessary or appropriate for decommissioning PB Unit 3.

This Fund is being established in order to avail PECo of certain Federal income tax benefits arising under S468A, and shall be oyerated and maintained in a manner consistent therewith.

III.

TRUST ASSETS For the purpose hereinabove described, PECo shall from time to time' transfer and assign to this Fund, by written instrument, such property as PECo deems appropriate, to be held,_ administered and distributed by Trustee in accordance with the provisions hereof.

IV.

DISTRIBUTIONS OF INCOME AND PRINCIPAL The income and principal of this Fund shall, except as provided in paragraph C hereof, be used exclusively for the decommissioning costs of PB Unit 3 as identified from time to time by PECo.

In connection therewith, income and principal may also be used to pay the administrative costs and other-incidental expenses of this Fund.

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A.

Until otherwise directed by PECo, Trustee shall, af ter paying to persons or companies other than PECo the administrative costs and other incidental expenses of this Fund, accumulate all of the remaining income, if-any, and add it to the principal of this Fund annually or more frequently, as PECo may direct from time to time.

B.

To the extent of the assets held in the Fund, Trustee shall pay nuclear decommissioning costs of PB Unit 3 to such persons, in such amounts, at such times and in such manner as it may from time to time be directed by PECo.

C.

Trustee shall' distribute to PECo, to such persons,- -in such amounts, at such times and in such manner as PECo may from time to time direct, any assets of this Fund determined by PECo to be unnecessary to effectuate the purpose of this Fund.

V.

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

1.

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

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of -such assets as' PECo may direct from time to time, but only in the manner permitted under S468A.

2.

To sell or exchange any asset held. hereunder on such terms and conditions and in such manner as.PECo may direct from time to time.

3.

To hold or register assets in street name, j

the name of its nominee or in bearer form, or by any other l

title holding device, without disclosing any fiduciary relationship.

4.

To retain and pay from the Fund attorneys.

accountants and investment counsel for advice and other professional services.

5.

To compromise any claims, including claims

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

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

VI.

DISQUALIFICATION This Fund shall not engage in, and Trustee shall not permit this Fund to engage in, any acts of self-dealing or -- --

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e ll any other acts that are contrary to th; purpose-or stated terms-of this Fund.

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VII.-

SITUS This Fund has been executed in the Commonwealth of Pennsylvania, which is hereby designated as the Fund's l

situs, and all questions pertaining to the validity, construction and administration of this Fund shall be determined in accordance with the laws of Pennsylvania, regardless of the jurisdiction in which the Fund may at any time actually be administered, provided, however', that this Fund shall at all times be maintained in the United States.

VIII.

TRUSTEE i

L PECo does hereby appoint FIRST PERNSYLVANIA BANK t

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N.A. as Trustee hereunder, and it shall receive compensation j

for-the performance of its services hereunder in accordance with the agreement entered into with PECo contemporaneous 1y L

herewith relating.to such compensation.

All such compensation i

shall constitute a charge against the Fund until paid.

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

written notice to PECo.

PECo shall have the right at any time and~from~ time ~to time to remove the Trustee then serving '

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

No Trustee serving hereunder shall be required to 1

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

Trustee shall not be responsible for the sufficiency of the trust assets to effect the decommissioning of PB Unit 3, for the use or application of any monies or property. held in the Fund when disbursed in conformity herewith, or.for the' qualification of any costs, fees or i

expenses paid from the Fund as nuclear decommissioning costs for purposes of 5468A.

Trustee shall not be liable, except for gross negligence,-for any acts, omissions or defaults of any agent i

appointed or selected with reasonable care; Trustee shall also not be liable for any acts taken or not taken at the direction 1

of or upon the instruction of PECo, whether such directions or instructions are delivered orally or by written instrument.

IX.

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

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Fund in whole or in part; provided, however-that no such instrument shall modify the rights, duties or immunities of the Trustee without its consent.

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IN WITNESS WHEREOF, PECo has caused its duly authorized of ficers to sign and seal this instrument-this. /4r4 e

L day of March, 1988.

. 1 Attest:

PHILADELPHIA ELECT COMPANY N'

b By:

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If?7(//tv Morton W.

Rimerman l

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-Title:

h Secretary -Title:

Vice President l

'[ Corporate Seal]

L Intending to be legally bound, Trustee does nereby accept the. trust hereinabove set rth-and agrees to carry out

\\x its provision.

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Attest:

FIRST PENNSYLVANIA B

,N.A.

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By:

h WlELIAM PANTElla ASST SicRg;c;

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Title:

itle: h v1snie l ideir ' /Teeded l

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sA, 1

. COMMONWEALTH OF PENNSYLVANIA :

SS.

COUNTY OF PHILADELPHIA On the / h day of March,'1988', before me, the h

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

Rimerman and _{-.S 3m d'r

, known to me or satisfactorily 1

proved to be the Vice President and 4+3'

"-t Secretary of L

Philadelphia Electric Company, and in due form of law acknowledged the establishment of the Peach Bottom Unit 3 Qualified Nuclsar Decommissioning Fund on behalf of Philadelphia Electric Company and desired that the same might be recorded as such.

W WITNESS my hand and. seal the day and year aforesaid.

/kuAalm [Ywn NotaryPglicv My Commission expires: b c?,/9f/

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iScheduloiof Payrntnts-EXHIBIT!C 16

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' Peach Deiti.orn : Atornie Power st at ionCUnitJ af

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.Mi nithurn Arnount ? ' (Exh. i bit - A-1 )'

-$73,903,282

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Tj CR tropinin'g yyears; fcm Collect ion' of-R

D ~cornini usi oning: Cost s,1990.. - 2008

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I j Ninirnu'rnibepositiper Year -

- $4,103,"738 E/ yea, ipr;pnidLBalance'in ENternal. Funds (Ot! D;cernber' 31,: 1989

$12,'201,059l',,"

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~~ Nurnb e"ofi Years-of - Miriirnurn: Deposit s it 7 Included--in Prepaid Balance 2.97-fl

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st 1992LDeposit-

'$123,172; q.:.;

jTotdliDeposits-

$61,'586,068:

{1Q93l-J 2OOB:at-$4,105,738/ year.

Hit

y fTotoli Doposits : Available for Decorntnissioning

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'$73,910,299-;

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-11)i s Reflects" f unds avai-lable to decornrnission-1

< Peach rBottorn Unit / 2 and 50% of Cornrnon plant -

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kNRC; Minimum ' AmountE-_(Exhi bit : A-2).

!$73,903,282--

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LMeratining? Years for Collection of iDenommi suioning ! Cost a '1990. - 2008 '

18' IMl.:.

IMinimum2' Deposit'per Year

- $4,105, 738 :; / year.

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lPr5p51d/ Dalance in" External : Funds

$12,2 O,592' gtiD:cembwr'31,"1989.

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! Numb;rJ of s: Years of:MinimumiDepostts IIncluded:in' Prepaid: Balance' 2.98 3

(1CCD Deposit:

($82,115-Tbth11Depositn

_....$61,586~,'068...,

d f 1C93( M;2OOB. atf $4,'105,730/ year:

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lTctc1fDeposita Available for'. Decommissioning (1)

-$73,909,(775-

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'(1)J :-Reflects: funds;available-to decommission

' Peach Bottomi (Jnit "3 end 50% of-: Common Plant,

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5 ATTACHMENT 3

- DECOM ISSIONING-REPORT AND CERTIFICATION-0F.

. FINANCIAL ASSURANCE FOR.

~42.59% OF SALEM GENERATING-STATION.-

UNITS 1 AND 2 h'

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