ML20155E505
| ML20155E505 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse  |
| Issue date: | 10/26/1998 |
| From: | Jeffery Wood CENTERIOR ENERGY |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| 2568, LAR-98-0009, LAR-98-9, TAC-MA2201, NUDOCS 9811050072 | |
| Download: ML20155E505 (58) | |
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Davis-Besse NucIcar Power Station E SE M SSO1 North State Route 2 m
Oak Harbor.Chio 43449 976n
.fr.hn K. Wood 419-249-2300 Vce President-Nuclear Fat 419"321-8337 Docket Number 50-346 License Number NPF-3 Serial Number 2568
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l October 26, 1998 l
United States Nuclear Regulatory Commission Document Control Desk Washington, DC 20555-0001
Subject:
SupplementalInformation Regarding Application Pursuant to 10 CFR 50.80 for Order and Conforming 1.icense Amendment to Transfer Operating Authority to FirstEnergy Nuclear Operating Company (License Amendment Request No. 98-0009)(TAC No. MA2201)
I Ladies and Gentlemen; i
This submittal provides supplemental information regarding the June 29,1998 application (Toledo Edison Serial Number 2540) for a 10 CFR 50.80 order and a conforming license amendment for the Davis-Besse Nuclear Power Station (DBNPS) Unit Number 1 Operating I
License Number NPF-3. The proposed changes would transfer operating authority for the
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DBNPS from the Toledo Edison Company (TE) and Centerior Service Company (CSC) to a new company, FirstEnergy Nuclear Operating Company (FENOC).
The June 29,1998 application indicated that the address of FENOC, as well as the names and addresses of its Directors and Principal Officers would be provided by supplemental letter. This information is included in Attachment 1 of the Enclosure. The application also referenced the original November,1977 DBNPS Operating Agreement and stated that an Operating Agreement would be cxecuted to govem operation of the DBNPS by FENOC. A copy of the November 21, 1977 Cperating Agreement is included as Attachment 2 of the Enclosure. A copy of Amend.nnt No. I to the Operat.ing Agreement is included as Attachment 3 of the Enclosure.
9811050072 981'dd6 PDR ADOCK 05000346 x
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i Docket Number 50-346 License Number NPF-3 Serial Number 2568 Page 2 As indicated in Section 3 of the amended Operating Agreement (Attachment 3 of the Enclosure),
it is the intent that on the first day of the calendar month immediately following the calendar month during which the NRC authorizes the transfer of the operating license to FENOC, FENOC will beco.m operator of the DBNPS. Based on these plans, it is requested that the NRC process the application on a schedule that will permit issuance of an immediately effective order corisenting to the transfer as promptly as possible, and in any event before December 15,1998, and that the NRC also issue the conforming license amendment during the month of December, 1998. This will allow FENOC to begin operations on January 1,1999.
If you have any questions or require additional information please contact Mr. James I,. Freels, j
Manager-Regulatory Affairs, at (419) 321-8466.
Very truly yours, MKL/laj Enclosure cc:
J. L. Caldwell, Acting Regional Administrator, NRC Region III S. J. Campbell, NRC Region III, DB-1 Senior Resident Inspector A. G. Hansen, NRC/NRR Project Manager J. R. Williams, Chief of Staff, Ohio Emergency Management Agency, State of Ohio (NRC Liaison)
Utility Radiological Safety Board T
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Docket Number 50-346 License Number NPF-3 Serial Number 2568
' Enclosure SUPPLEMENTAL INFORMATION REGARDING APPLICATION FOR AMENDMENT TO FACILITY OPERATING LICENSE NUMBER NPF-3 DAVIS-BESSE NUCLEAR POWER STATION UNIT NUMBER 1 This submittal (submitted under cover letter Serial Number 2568) provides supplemental information regarding the June 29,1998 application (Toledo Edison Serial Number 2540) for a 10 CFR 50.80 order and a conforming license amendment for the Davis-Besse Nuclear Power Station (DBNPS) Unit Number 1 Operating License Number NPF-3. provides the address of FENOC, as well as the names and addresses of its Directors and Principal Officers. provides an information copy of the original November,1977 DBNPS
. Operating Agreement. provides an information copy of Amendment No. I to the Operating Agree nent.
I, John K. Wood, state that (1) I am Vice President - Nuclear of the Centerior Service Company,
'(2)I am duly authorized to execute and file this certification on behalf of the Toledo Edison Company and The Cleveland Electric Illuminating Company, and (3) the statements set forth herein are true and correct to the best of my knowledge, information and belief.
By:
J. K.) Mood, Vice President - Nuclear l
l Affirmed and subscribed before me this 26th day of October, 1998, i
MA-her Notary Public/$ tate of Ohio Nora Lynn Flood - My commission expires September 4, 2002.
1' Docket Number 50-346 License Number NPF-3 Serial Number 2568 Page1 l
SUPPLEMENTALINFORMATION REGARDING APPLICATION PURSUANT TO 10 CFR 50.80 FOR ORDER AND CONFORMING LICENSE AMENDMENT TO TRANSFER OPERATING AUTHORITY TO FIRSTENERGY NUCLEAR OPERATING COMPANY Address of FENOC:
FirstEnergy Nuclear Operating Company Davis-Besse Nuclear Power Station 5501 North State Route 2 Oak Harbor, OH 43449 9760 Names and Addresses of Directors of FENOQ William F. Conway Anthony J. Alexander President, William F. Conway & Associates,Inc.
Executive Vice-President and Scottsdale, Arizona 85262 General Counsel of FirstEnergy Corp.,
the Toledo Edison Company, The Cleveland William R. Holland Electric Illuminating Company, Chairman of the Board and Chief Executive and Ohio Edison Officer of FirstEnergy Corp.
76 South Main Street 76 South Main Street Akron, Ohio 44308 1890 Akron, Ohio '.44308-1890 John P. Stetz H. Peter Burg President and Chief Nuclear Officer President and Chief Operating Officer of FirstEnergy Nuclear Operating Company of FirstEnergy Corp. and President of 5501 North State Route 2 the Toledo Edison Company and Oak Harbor, Ohio 43449-9760 The Cleveland Electric Illuminating Company 76 South Main Street Akron, Ohio 44308-1890 Princioal Officers of FENOC:
John P. Stetz President and Chief Nuclear Officer I
John K. Wood Vice President,' Davis-Besse Nuclear Power Station Lew W. Myers Vice President, Perry Nuclear Power Plant
Docket Number 50 346 License Number NPF-3 Serial Number 2568 Attaclunent 2 NOVEMBER 21,1977 DAVIS-BESSE UNIT NO.1 OPERATING AGREEMENT (44 pages follow)
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OPERATING AGREEMENT DAVIS-BESSE UNIT NO. 1 This Agreement dated as of November 21, 19'/ 7, entered 5
into by and between The Cleveland Electric Illuminating Company, an Ohio corporation ("CEI"), and The Toledo Edison Company, an Ohio corporation ("TE")
(sometimes, collectively the " owners" and individually the " Owner").
W I T N E S S E T H:
i.
This Agreement is entered into pursuant to a Memo-randum of Understanding dated September 14, 1967, to which CEI, TE, Duquesne Light Company, a Pennsylvania corporation, Ohio Edison Company, an Ohio corporation, and Pennsylvania Power Company, a Pennsylvania corporation, are parties (collectively the " Companies").
2.
The Companies have provided for the construction, on a tract of land, known as the " Davis-Besse Site" and con-sisting of approximately 954 acres located in Carroll Township, Ottawa County, Ohio, of a light-water nuclear generating unit r
having a net rated capacity of approximately 906,000 kilowatts, known as the " Davis-Besse Nuclear Power Station, Unit No.
1"
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(" Unit No.
1").
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Unit No. 1 was constructed pursuant to a Construction Agreement between CEI and TE dated December 26, 1968 (" Unit No. 1 Construction Agreement").
The Unit No. 1 Construction Agreement, as amended by an Agreement to Exchange ownership Interests dated April 27, 1976 (" Exchange Agreement"), provides that Unit No. 1 is owned by CEI and TE as tenants in common with undivided inter-ests of 51.38% and 48.62%, respectively.
The term " Unit No.
1", as used in this Agreement, includes materials and supplies held for use in connection with Unit No. 1, interests in land associated with Unit No. 1 and property included in the definition of the term " Unit" in the Construction Agreement referred to above.
s This Agreement provides for the operation and mainte-nance of Unit No. 1 from and after the initial date of Commercial Operation of such Unit.
3.
Subject to matters requiring joint action as specifically provided herein or as required by law, TE, on its own behalf and on behalf of CEI, shall operate and maintain Unit No. 1, provide necessary materials, supplies and fuel for Unit No. 1, and make any additions, replacements and retirements with
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Ld' respect to Unit No.
1, taking all steps which it deems necessary J
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or appropriate to carry out the provisions of this Agreement, all in accordance with sound engineering and operating principles and practices and currently applicable laws, codes and regulations; provided, however, that additions, replacements and retirements involving material changes in capability, useful life and basic methods of operation of Unit No. 1 and similar matters, and not included in the budget with respect to Unit No. 1 submitted pursuant to Section 13 hereof and not of an emergency nature, shall be made only upon mutual agreement of CEI and TE.
Retire-ments with respect to Unit No. 1 shall be effected only in a manner consistent with any applicable provisions of the respec-tive mortgage indentures of CEI and TE.
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4.
Each of CEI and TE shall be entitled to a percent-age equal to its ownership interest in Unit No. 1 of the hour-to-hour net operating capacity of Unit No. 1, as determined by TE, and the energy associated therewith.
E 5.
TE will keep CEI informed cs to the expected maximum hour-to-hour net operating capacity of Unit No. 1 permis-sible for proper operation of Unit No. 1, as determined by TE, as it may vary in accordance with conditions existing from time-to-time, and CEI and TE shall each reserve its desired share of capacity in Unit No. 1 and schedule its desired share of energy E _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _
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l associated therewith, on an hour-to-hour basis, up to the limits of its entitlement, all in accordance with procedures to be agreed upon by CEI and TE.
Subject to necessary outages or re-ductions in capability, Unit No. 1 shall be operated by TE so as to produce capacity and energy equal to the sums of the capacity reserved and energy scheduled by CEI and TE.
TE shall exercise
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its best efforts to achieve a balance between the scheduled output of Unit No. 1 and its actual output, and any imbalances shall be recorded and appropriate adjustments made periodically to reduce such inbalance.
6.
TE will keep CEI informed as to the expected minimum net generation for proper operation of Unit No.
1, hs determined by TE, as it may vary in accordance with conditions A
existing from time-to-time.
At any time when Unit No. 1 is operated at the level of such minimum net genera b' ion, CEI and TE d
shall each schedule an amount of energy from Unit No.
1 equal to E
its percentage entitlement specified in Section 4 of such minimum net generation, provided that if CEI or TE shall sched-ule more than its percentage entitlement of such minimum net generation, the other Owner shall schedule not less than the balance of such minimum net generation ~.
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7.
CEI authorizes TE to provide and TE shall provide a staff of competent engineering, supervisory, operating, mainte-nance and other staff personnel to operate and maintain Unit No.
1.
Such staff and all other employees of TE performing work in connection with the operation and maintenance of Unit No. 1 shall be, and for all purposes shall be considered tc be, employ-ees only of TE.
Such staff and employees shall receive their instructions and orders only from appropriate officials of TE.
8.
Subject to any applicable restrictions contained 1
in Sections'3 and 12, CEI hereby appoints TE as its agent, and
_j TE agrees as its agent and as principal on its own behalf, to q
d negotiate, execute and enforce contracts (including purchase order contracts), either in TE's name only or'in the name of TE on its own behalf and as agent for CEI, providing for.the purchase
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of materials, equipment and ' services for the operation and maintenance of Unit No. 1, including the provision of nuclear
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material and nuclear fuel as'semblies in connection with the operation of Unit No. 1 and the obtaining of necessary govern-mental authorizations therefor.
CEI hereby ratifies and confirms all contracts entered into by TE prior to the execution of this
~~~J Agreement relating to the operation or maintenance of Unit
.s.
No.
1.
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1 9.
Scheduled maintenance of Unit No. 1 shall be per-formed by TE in accordance with the CAPCO Basic Operating Agree-ment to which the Companies are parties dated as of January 1, 1975, or any extension thereof or successor agreement thereto.
10.
TE shall keep CEI informed concerning the operation and maintenance of Unit No. 1 and TE's plans with respect thereto, but no failure of TE to provide information pursuant to the 4
provisions of this paragraph shall relieve CEI of any of its obligations under this Agreement.
TE shall accord CEI access to Unit No. I at all reason-able times and in accordance with established safety and security
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procedures in order that its representatives may examine Unit No. 1 and observe its operation.
On request therefor, TE shall supph.y CEI with copies of such regular and any special reports on the operation, maintenance and condition of Unit No.
1, whether made by employees of TE or by other engineers, consultants or advisors.
CEI and TE shall consult from time-to-time as to the operation, maintenance and condition of Unit No.
1, and TE shall consider any proposal or suggestion of CEI with respect thereto.
CEI may at its own expense provide and maintain com-munication, telemetering and control equipment connected to TE's l
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System Dispatch office necessary (1) to monitor Unit No.
1, (2) to integrate its entitlement from Unit No. 1 with its control of
.its other sources of generation, or (3) if and when Unit No. 1 is automatically regulated by TE, to participate in the regula-tion of Unit No. 1.
Such equipment and its operation shall be subject to and shall not interfere with TE's control of Unit No.
1 and shall not unduly affect the operation of Unit No. 1 or the system of any of the Companies.
11.
CEI will cooperate with TE in all activities in connection with Unit No.
1, including, without limitation, the m
filing of applications for authorizations, permits and licenses, and the execution of such other documents as may be reasonably B
necessary to confirm TE's authority to act for it and the assumption by it of its proportionate share of the obligations to be incurred pursuant to this Agreement, but, except at TE's written request, CEI shall not incur any obligation in connection with Unit No. 1 which would or might obligate TE to any third party, except as specifically provided herein.
12.
CEI and TE understand and recognize that nuclear material and nuclear fuel assemblies for Unit No. 1 may be the subject of agreements among the Companies relating to or re-sulting from joint planning, scheduling and purchasing by the Companies as a part of nuclear fuel arrangements for Unit No. 1 and other units owned by some or all of the Companies.
Subject to such agreements as may exist from time-to-time and be appli-cable, TE shall manage, schedule deliveries of and handle fuel supplies to Unit No.
1, including handling of spent fuel from shipment off-site through final reprocessing and disposal of radioactive wastes, whether under contracts entered into by TE with third parties or under contracts entered into prior to the execution of this Agreement by CEI with third parties.
Account-ing for costs of nuclear materials, nuclear fuel assemblies and fuel handling expenses, shall be handled in accordance with Exhibit A attached hereto and made a part hereof.
s 13.
TE will prepare, revise from time-to-time as ao-propriate and furnish to CEI an annual budget showing by months to the extent possible, the expected operating and maintenance expenses, capital expenditures and retirements to Unit No. 1.
TE will also prepare, revise from time-to-time as appropriate ar.d furnish to CEI projections of such budgets for such reason-ably longer periods of time as may be requested by CEI.
TE will make such records and keep such accounts, con-sistent with sound accounting practices, as will permit each of the Owners to record on its books the transactions provided for w
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herein, in conformity with the Uniform System of Accounts pre-scribed for Public Utilities and Licensees by the Federal Energy Regulatory Commission and any state commission having juris-diction, as such systems of accounts are now in effect or are hereafter modified or amended.
CEI and its independent auditors, shall have access at all reasonable times to such records and accounts and TE will furnish copies of all or any part thereof as requested.
TE shall preserve ~and maintain the originals of each of such records and accounts for at least such periods of time as CEI may request, having in mind the requirements of regulatory ll authorities having jurisdiction and the policies and practices of both owners with respect to retention of records.
s E
TE shall prepare, and furnish to CEI copies of contin-uing property records with respect to Unit No. 1 in such form as is agreed to be reasonably necessary to conform to the accounting requirements of CEI.
i' The cost of making, preserving and making copics of such budgets, records and accounts with respect to Unit No. 1 shall be borne by CEI and.TE in proportion to their respective ownership interests, except that any costs incurred for the special purpose of an owner shall be borne by such owner.
_9_
TE shall have special audits conducted, with respect to the matters provided for in this Agreement, either internally or by independent auditors, according to such programs and procedures as agreed to be necessary to conform to the auditing requirements of each owner and shall furnish copies of the reports of such audits to CEI.
The cost of making such audits, including any participation by CEI's auditors agreed to be desirable and neces-shall be shared by CEI and TE in proportion to their respec-
- sary, tive ownership interests in Unit No. 1, except that any costs incurred for the special purpose of an Owner shall be borne by such owner.
Any owner may, and any of'the other companies having a power entitlement in Unit No. 1 may, with respect to the period of such entitlement, at its own expense, make such further audits, using its internal or independent auditors or both, as it may deem desirable.
14.
All costs and expenses contemplated by this
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Agreement, including overheadA, directly or indirectly associated with the operation and maintenance of Unit No.
1, whether incurred by either or both of the owners, shall be shared by both owners, in accordance with Exhibit A attached hereto.
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_- - - - - -- - - ~-
The types of administrative and general costs set forth in the CAPCO Accounting and Procedure Manual in use at
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the time incurred by TE shall be allocated by it among the total of all generating stations operated by it, including Unit No.
1, util-izing the bases of allocation set forth in the CAPCO Accounting and Procedure Manual.
If requested by CEI, TE will make such examinations, analyses or studies as would go to support the reasonableness of the specific costs so allocated to Unit No.
1 or provide a basis for modification to achieve such reasonableness with respect to either the specific costs or the total admin-istrative and general expense allocation.
Sharable costs which are incurred by CEI shall be accumulated and billed on a direct charge basis drawn from specific records or reasonable estimates with applicable additives as agreed upon by CEI and TE.
Except as otherwise provided above, the accounting 1
methods and practices normally in use at the time by each of the Owners in determining and assigning operating and maintenance
,i costs and expenses, generally, are to be used by each of the Owners for the purposes of this Agreement!, unless otherwise agreed, provided such methods and practices are consistent with i
sound accounting practices.
15.
It is the intent of CEI and TE that so far as possible each owner shall separately report, file, be responsible for and pay all property, franchise, business or other taxes applicable to its ownership interest in Unit No.
1.
To the extent that such taxes may be levied on or assessed against Unit No. 1, or its operation, or the owners in such manner as, in the opinion of CEI and TE, to make impracticable or inequitable the carrying out of such intent, then such taxes shall be deemed a part of the cost or expense of Unit No. 1 or the operation thereof.
16.
As soon as possible after the close of each calendar month, TE shall advise CEI as to its respective sh'are of estimated operation and maintenance expenses and' costs of additions to and adjustments in shares of fuel inventories and/or materials and supplies inventories for such preceding month. by FERC account numbers.
Fuel expense data shall preferably be supplied on or I
before the second working day of the following month, and the other data preferably on or before the eighth working day of such month.
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t montih, preferably on or before the 25th of the following month, TE shall prepare and deliver invoices to CEI for its respective _ _ _ - _ - _ - - _ - -
1 share of actual fixed and variable operation and maintenance expenses and costs of additions to and adjustments in shares of fuel inventories and/or materials and supplies inventories for such preceding month, by FERC account numbers, in accordance with 3
y Exhibit A.
Theamountbilledwillbepayableonreceipt.]
CEI and TE shall from time-to-time jointly determine and furnish on an equitable basis the amount of working capital needed for the operation and maintenance of Unit No. 1, and the share thereof to be provided by each.
If CEI and TE so agree, one owner may provide all or-part of the working capital share of the other Owner and shall be compensated therefor by the payment i
of approoriate fixed charges.
17.
Neither Owner shall be liable to the other Owner for any loss, cost, damage or expense incurred by one Owner as a result of any action or failure to act by the other in connection wit,h the ownership, operati6n, use or maintenance of Unit No.
1, except for any action not taken in good faith and prejudicing one Owner for the benefit of the other.
H 18.
If by reason of any liability to third persons arising out of the ownership, operation, use or maintenance of any property which is the subject of this Agreement (including g
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personal injury to and death of third persons and damage to property, but other than liability under the Workmen's Compensa-tion Laws of Ohio), one Owner shall be called upon to make any payment or incur any obligation in greater percentage of the total liability than its proportionate ownership interest in such property, the other Owner shall indemnify and reimburse such Owner in such amount as will cause each Owner to share such liability in proportion to its ownership interest, irrespective of the negligence of either Owner.
19.
TE shall use its best efforts to arrange for and maintain appropriate insurance to cover (a) risk of damage to or loss of Unit No. 1 and materials and supplies held for use in connection therewith, including risk of damage or loss due to a l
nuclear incident, (b) liability for bodily injury to, or death of, or damage to property of third persons, including liability due to a nuclear incident, arising out of the ownership, opera-tion, use or maintenance of Unit No.
1, and (c) such other risks as CEI and TE may agree shall be so covered.
The cost of such insurance as well as any losses not covered by insurance shall be shared by CEI and TE in proportion to their ownership interests in the property involved, and CEI and TE shall be named insureds in all policies purchased hereunder.
4!
Ill _.....
TE shall assist the insurers in the investigation, ad-justment and settlement or defense of all claims covered by such insurance, and shall investigate, adjust and settle or defend all claims or losses arising out of the ownership, operation, use or maintenance of Unit No. 1 and not covered by insurance carried by CEI and/or TE, subject to approval by both owners of any such non-insured claim, or combination of such claims arising out of the same occurrence, in evacss of $25,000.
Each owner may separately procure at its own cost such other insurance as it may deem appropriate.
Each Owner shall make arrangements for appropriate workmen's compensation coverage for its own employees.
s 20.
An owner shall not be considered to be in default in the performance of any of its obligations hereunder (other than obligations to pay costs and expenses) if failure of perform-ance shall be due to uncontrollable forces.
The term "uncontrol-lable-forces" shall mean any cause beyond the control of the Owner affected, including but not limited to failure of facilities, flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance, labor dispute, sabotage, restraint by Court order or public authority, or inability to obtain necessary licenses, permits or other governmental authorizations.
Nothing Bl 1
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contained herein shall be construed so as to require an Owner to settle any strike or labor dispute in which it may be involved.
An Ovmer which is unable to fulfill any obligation by reason of uncontrollable forces shall exercise due diligence to remove such inability with all reasonable dispatch.
21.
The duties, obligations, and liabilities of the Owners are intended to be several and not joint or collective, and nothing in this Agreement shall ever be construed to create an association, joint venture, trust or partnership, or to impose a trust or p'artnership duty, obligation or liability on or with regard to them or any of the other Companies.
Each Owner shall be individually responsible for its own obligations as herein provided.
No Owner shall be under the control of or shall be deemed to control the other Owner or any of the other Companies, nor shall the owners or the Companies be deemed an entity by virtue of this Agreement.
No Owner shall have a right or power to bind the other Owner or any of the other companies without its express written consent, except as expressly provided in this Agreement.
22.
No Owner shall permit any unsatisfied liens to remain in ef fect against Unit No.
1, or fuel or materials and II supplies acquired in connection with operation and maintenance a
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thereof (other than the lien of its mortgage and liens for taxes and assessments not yet delinquent); provided that an owner shall not be required to pay or discharge any such lien so long as it j
in good faith shall be contesting the same in a proceeding which shall operate during the pendency thereof to prevent the collection or enforcement of such lien so contested.
23.
Failure of an Owner to insist upon strict per-formance of any of the provisions of this Agreement, or to take advantage of any of its rights hereunder shall not be construed as a waiver of any such provisions, or a relinquishment of any such rights, but the same shall continue to remain in full force and effect.
24.
This Agreement is made under and shall be governed by the laws of the State of Ohio.
25.
This Agreement shall inure to the~ benefit of and be binding upon the owners and their respective successors and assigns; provided, however, that no owner will, without the prior
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written consent of the other owner, assign this Agreement, except as the same may be assigned voluntarily or otherwise under its
.J first mortgage or to a successor to all or substantially all of h) the assets of such owner by way of merger, consolidation, sale or otherwise.
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26.
Prior to the termination of this Agreement, CEI and TE shall agree upon the time when Unit No. 1 is no longer used and useful for their respective purposes and shall be retired and shall enter into a written agreement providing for (1) the disposal of Unit No.
1, (2) the method to be adopted for such disposal, and (3) the date of commencement of such disposal.
The disposal plan adopted for Unit No. 1 shall be such as not to interfere unreasonably with the operation of any other generating unit on the Davis-Besse Site not being retired and any of the Companies which own such other generating unit (s) not being retired shall have the option to purchase any part or all of common facilities which are part of Unit No. 1 being retired at the then depreciated book cost.
The costs and expenses relat'ing to disposal of Unit No. 1 and any then remaining salvage value shall be shared by the owners in prcportion to their ownership interests therein, unless otherwise agreed by the owners.
27.
Any controversy,or claim arising out of this Agreement, including the refusal by an Owner to perform the whole or any part hereof, shall, upon demand of the Owner aggrieved, be settled by an Arbitration Board, which shall consist of three non-representative members and such additional representative members as hereinafter provided, in accordance b he with the provisions of this Section.
No person shall be eligible for appointment as a non-representative member of the Arbitration Board who is an officer, employee, shareholder of, or otherwise interested in, any Owner or any of the other Companies or any affiliate thereof or in the matter sought to be arbitrated.
Unless otherwise agreed, no demand for arbitration shall be made more than one year after the owners have reached an impasse as to the controversy or claim involved.
The owner demanding arbitration shall serve written notice upon the other Owner setting forth in detail the matter or matters with respect to which arbitration is demanded, and shall serve copies of such notice upon the other Companies.
Within a period of ten days from the date of receipt of the aforesaid written notice, each Owner shall appoint one representative member to serve as a member of the Arbitration Board, and within a period of thirty days from such receipt of such written notice, such representa-tive members shall unanimously agree upon the persons who shall serve as the three non-representative members of the Arbitration Board.
If the representative members shall fail to unanimously l
agree upon the appointment of any or all of the three non-repre-sentative members of the Arbitration Board within the specified P
i
l thirty-day period, an owner may, upon written notice to the other owner, request the American Arbitration Association to submit to both owners a list from its panels of arbitrators of the names of at least seven persons from which the non-representative member or members who have not been so appointed shall be selected in accordance with the Commercial Arbitration Rules of such Association.
If an Owner shall fail to appoint its representative member within the specified ten-day period, such owner shall be deemed to have waived its right to appoint such representative member and the Arbitration Board shall consist of the three non-
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representative members and such representative members, if any, as shall have been appointed in accordance with the provisions of this section.
N The arbitration proceedings shall be conducted at a place, to be designated by the Arbitration Board, within the op-erating area of one of the owners.
The Arbitration Board shall afford adequate opportunity to each owner to present information j
with respect to the controversy or claim submitted to arbitration i
and may request further information from any Owner.
Except as provided in the preceding sentence, the owners may, by mutual agreement, specify the rules which are to govern any proceeding l
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before the Arbitration Board and limit the matters to be considered by the Arbitration Board, in which event the Arbitration Board shall be governed by the terms and conditions of such agreement.
To the extent of the absence of any such agreement specifying the rules which are to govern any proceeding, the then current rules of the American Arbitration Association for the conduct of commercial arbitration shall govern the proceedings.
The arbitration shall be limited to the matter or mat-ters specified in the initial notice demanding arbitration and the award of the Board shall not affect or change any other pro-vision of this Agreement or any other transaction between the Owners.
s Procedural matters pertaining to the conduct of the arbitration, and the award of the Arbitration Board shall be 4
made upon a determination of a majority of the non-representative members thereof; provided, however, that the representative members shall have the full right and authority to participate in all meetings and deliberations of the Arbitration Board leading to the award.
The findings and award of the Arbitration Board, so made upon a determination of a majority of the non-representative members thereof, shall be final and conclusive with respect to the controversy or claim submitted for arbitration
l and shall be binding upon both Owners except as otherwise provided by law.
Such award of the Arbitration Board shall specify the manner and extent of the division of the costs of the Arbitration proceedings between the Owners.
Judgment upon the award may be entered in any court, State or Federal, having jurisdiction.
28.
This Agreement shall be fully effective as of the date of Commercial Operation of Unit No. 1 and shall be effective as of such earlier date or dates as relate to operating matters in connection with Unit No. 1 not covered by the Construction Agreement for such Unit.
This Agreement shall remain in full force and effect with respect to Unit No. 1 until the date of retirement of such Unit determined pursuant to Section 26 hereof.
IN WITNESS WHEREOF, the Owners have caused this Agreement to be duly executed as of the date above written.
ATTEST:
THE CLEVELAND ELECTRIC ILLUMI-NATING COMPANY e..
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THE TOLEDO EDISON COMPANY L
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OPERATING AG?.ID!ENT (CAPCO UNITS NOS. 4, 11 and 13)
DAVIS-BESSE UNITS NOS.1, 2 AND 3 EXHIBIT A
- Section I.
Accounting Concepts The Toledo Edison ; Company (TE) shall record all operation and caintenance costs ir. aceo'rdance with.the Federal Power Cocmission Unifere Sysien of Accounts,, as outlined in the following schedule.
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All charges to accounts will be bastd on TE's functional accounting schene fer Divis-2 esse Units Nos. 1, 2 and 3.
These function nuabers vill be used to identify the particular itutallatica that should bear the associated expense.
Those costs applicable to common facilitics or cc=:on activities which cannot be charged dt.rectly to Davis-Besse Units Nos.1, 2 or 3 on the. basis of actual or estimated labor or other expanses will be charged to the proper r.tvis-Besse function numbers which have baen identified by TE as representing common activities.
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5 The costs associated with these cotr.on f acilities or acti-vities and charged to the proper fun: tion numbers shall then be allocated between Davis-Besse Unita Nos.1, 2 and 3 on the basis of the allocation ecdes listed under the Common Costs column on Section 11A.
These code definitions appear in Section IIB.
The ovners of DB No. 1 shall share those costs charged directly to that unit plus the portion of tha applicable co:eton costs which are allocated on the basis of the Comm:n Costs allocation codes.
The evners of D3 No. 2 shal,1, share those cost s charged directly to that unit plus the portion of the applicable connon costs which are allecated en the basis of the Con on Cests allocation codes.
The owners of.D3 No. 3 sh'all share those costs. etarged diredly to that unit plus the portion of the applicable common cosen which are allocated on the basis of the Cocron Costs allocation codes.
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- Although the provisions of this Exhibit A apply not only to Davis-Besse Unit No. 1, but also to prospective Davis-Besse Units Nos. 2 and 3, and common costs'of all three units, the provisions of the operating Agreement of which this Exhibit A is a part apply only to the segregated costs of Davis-Besse Unit No. I as shown heroin.
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Section IIA, Allocation of Operation and Maintenance Costs Direct Charge Plus Allocation Common FPC of Common Costs Costs Allocated Account Dencription DR No. I DB No. 2 DB No. 3 to DB 1, 2, 3
_0]LYlif._T10N
'i l 7 Opernt ion Supervisi: a and Engineering The cost of labor and expenaen incurred In tite.a,eneral stiperv!nlon of tha operation of nuclear power nencratIng statiuns.
On-site 01 02 03 C
Off-site 01 02 03 C
518 Nuclear Fuel Expense The net cost of nucle _ar fuel assemblics used in the production of energy as well.
as costs involved when fuel is leased.
Owned nucicar fuel cou wned Fixed consumption 01 02 03 Cost of nuclear fuel consumed at zero net oucput point of the' turbine-generator heat consumption curve during all periods of. zero or posi:ive not generation.
Variable consumption HV llV HV Incremental cost of nuc' lear fuel consumed in production.of net KWHR of output above tite zero net, output point of the tt:rbine-generator heat consumption curve.
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Sectic.n IIA, Allocation of Operation and Maintenance Costs FPC of Cornuson Couts Conts Allocated Account DenerIption Dil No.
I
!!!! No. 2 D11 No. 3 to Ull 1, 2, 3 lli (coutInued) 1.ca: sed nuclear f uel consumed-burnup expense Fixed consumption 01 02 03 Coat of nuclear fuel consumed at zero net output pulut of Llie turblue-gene-rator heat consumptlun curve durinn all periodn of zero or pon!tive net generation.
Variable consumption llV HV liv i
Incremental cost of nuclear fuel consumed in production of net KWilR of output above the zero not.
output point of the turbine-generator consu np r ion curve.
Leased nuclent fuel consumed - deferred
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expense amortization Fixed consumption 01 02 03-Cost of nuclear fuel consumed at zero net output point of the turbine-generator heat consumption curve during all periods of zero or positive net generation.
Variable consumption IIV IIV
!!V Incremental cost of nuclear fuel consumed in production of net KUllR of output above the zero net output point of the turbine-gen -itor heat consumption curve.
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Section IIA, Allocation of Operation and Maintenance C'osts
-i Direct Charge Plus Allocation Common FPC of Common Costs Coats Allocated
.iceount Descr12tton Dn No. 1 Un No. 2 Dn No. 3 to DB 1,_2 3
r 51 ';
Coolant s and unter The cont of Inbor, materials used and expensen incurred for heat t ra ns fer mater! tit. anil w:st er tined for st eam nnd tooiin;; put ptises line I tid I tin, b ut not ] I m-t t ed to the fo Iowlim,:
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Service water system 01 02 03 Testing and cor1 trol of water and unste treatment plants related to secondary systems.
I!Y llY I!Y C
Chemicals and misec11aneous supplies and expenses for water and wastewater treatment plants.
IlY 11Y llY C
520 Steam E.':penses The cost of labor, materials used and expenses incurred in production of i
steam thrcunh nuclear processes, and similar expenses for operation of any auxiliary superheat facilities, in-cludinn but not ]imited to, the fol-lowing systeins and their associated instruments, controls and switchgear and the following activities:
Fuel handling and refueling systems llY HY HY Radioactive vaste treatment and disposal systems 01 02 03
Section IIA, Allocation of Operation and Maintenance Costs Dircet Charge Plus Allocation Common I-TC of Common Costa Contn Allocated Avenuot Descrlytinn Un Na, I I)!! No. 2 D!l No. 3 to 1)11 1,2,3 520 (continued)
Feedwater ::y:: tem 11Y llY llY Reactor plant service and testing 01 02 03 Nuclear +.tean supply 3:ystem service, test Inn and tre.itt:ent 01 02 03 Testing and control of water and wa::t c t reatment plants related to primary syst era.
IlY 11Y IIY C
523 Electric Expenses The cost of labor, materials used and expenses incurred in operating turbo-generators, ct'ca:n turbines and their
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auxiliary appas.nus, switchscar and other cicetric equipment to the points where electricity leaves for conversion for trannmission or distribution, in-ciuding but not limited to the folloutng:
Turbine-gcuerator and accessories 01 02 03 Lubricants 01 02 03 Auxiliary boilers 01 02 03 Dicac1 generators 01 02 03 e
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an our car ram
-air-Section IIA, Allocation of Operation and Maintenance Costs Direct C!targe Plus Allocation Common FPC of Common Costs Conts Allocated Ar etnint Denc r igion D!t No. I D!l No. 2 DIl No. 3 to Dil _1,_2_,_3 524
!!!ncellaneous Nuclear Power Expenses The cost. of labor, m:itertain used and expennes J ncurred wlitch a re not read!]y avs t;9 table to ot her nuclear generat ion operat ion accounts incinding, but not limited to t;ie following:
Station cupplies and misc. expensen 01 02 03 Community relations activities 01 02 03 C
Safety activitics 01 02 03 C
Servicing plant buildings and grounds 01 02 03 C
Miscellaneous plant service and testinn 01 02 03 C
Fuel oll consumed for auxiliar'y boilers 01 02 03 Property protection 01 02 03' C
Other miscellaneous expenses 01 02 03 C
525 Rents All rents of property of others used,-
occupied or operated in connection with nuclear generation.
01 02 03 C
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Section IIA, Allocation of Operation and M;1intenance Costs Direct Charge Plus Allocation Common FPC of Conmon Costs Costs Allocated Account Descrlytion DB No. 1 Dn No. 2
_DR No. 3 to DB _I, 2, 3 MA1::TIMANCE 526 Maintenance Supervision and Engineering The, cost of labor and expenses incurred in the gcueral supervision and direction of maintenance of nuclear generation facilitics.
On-site 01 02 03 C
Off-site 01 02 03 C
529 Maintenance of Structures The cost of labor, ciaterials used and expenses incurred in the maintenance of structures, the book cost of which is includable in account 321, Structures and Improvements.
Structures associated with Units 1, 2 or 3 including, but not limited to the following:
Turbine generator building, containment Ol' 02 03 building, auxiliary and other buildings Containment vessel 01 02 03 Structures which cannot he directly asso-ciated with Units 1, 2 or 3 including but t
not limited to the followinn:
W. iter treatment plant buildinn 01 02 03 C
Sewane treatment plant lu Ildinn 01 02 03 C
Intake canal 01 02 03 C
Section IIA, Allocation of Operation and Maintenance Costs Direct Charge Plus Allocation Common FPC of Common Costs Costs Allocated Account Descrlption Dn No. I DH No. 2 DB No. 3 to Dn I, 2, 3 529 (continued)
Railroads and roads 01 02 03 C
Other buildings and grounds 01 02 03 C
530 Maintenance of Reactor Plant Equipment The cost of labor, materials used and expenses incurred in the maintenance of reactor plant, the book cost of which is includable in account 322, Reactor Plant Equipment including, but not limited to the following:
Primary plant equipment and piping 01 02 03 Radioactive waste treatment and 01 02 03 disposal equipment Fuel handling and storage equipment 01 02 03 Feeduater supply and treatment
!!Y llY llY equipment 531 McIntenance of Electric Plant The cost of labor, materials used and expenses incurred in the maintenance of clectric plant, the book cost of which is includable in account 323.
Turbogenera tor Units, and account 324, Accensory Elect ric Equi n' tent includlun, l
but not 1initeil '.o the fullowinn:
Turuine ncnerator and related 01 02 03 equipmer.
s Sectien IIA, Allocation of Operation and Maintenance Costs Direct Charge Plus Allocation Common FPC of Common Costs Costs Allocated Account Description Dn No. I DB No. 2 DB No. 3 to Dn 1, 2,
3 531 (centinued)
Condenser and circulating. vater 01 02 03 equipment Auxiliary boiler 01 02 03 Accessory electric equipment 01 02 03 532 Maintenance of Miscellaneous Nuclear Plant The cost of labor, materials 'used and expenses incurred in maintenance of miscellancous nucleir generating' plant, the book cost of which is includable in account 325, Miscellaneous Power Plant Equipment including, but not limited to the following:
Miscellaneous station equipment 01 02 03 Cencral station equipment 01,
02 03 C
Miscellaneous sewage treatment 01 02 03 C
equipment Mincc11ancous water trcotment 01 02 03 C
equipment 4
Environmental testing equipment 01 02 03 C
Fire protection etulpment 01 02 03 C
Station security equipment 01 02 03 C
Instrument standards 01 02 03 C
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Section ITA. Allocation of Operation and Maintenapen Costs FPC Direct Charge Plus Allocation Common of Cormnon Casts Costa Allocated
' Arc <uin t Dencription Ull No. I DH No. 2 Dn No. 3 to DR 1, 2, 3 532 (continued)
Power during outages 01 02 03 Other miscellaneous plant 01 02 03 Cepg ] pme n t Sr:2 Trnnm:incion Operation Station Expennen 01 02 03 C
The coct of labor used and expenses incurred in operating transmission suttching station; including the following:
The main unit step up transformer, high voltage switching equipment and associated facilities. Also. included are costn annocia-ted with transmission switchyard common facili-ties that are owned by the joint owners of the D-B Generatint,. " nits.-(Those switchyard common facilities not owned by the D-B Cencreti::g Units' joint owners are covered by provisions of the CAPCO Transmission Agreements.)
570 Transmissica Maintenance Maintenance of Station Equipment 01 02 03 C
The cost of labor, inaterials used and expenses incurred in maintenance of station equipment, the book cont of which is includable in account 353, Station Equipment.
This equipment in-cludes the following:
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- Section IIA, Allocation of Operation and Maintenance Costa FPC Direct Charge Plus Allocation Common or Common Conts Costs Allocated
.A.c.c.o.i n i.t.. _
De:rerli t ton lin No. 1 Dn No. 2 Dti No. 3 to Dn 1, 2,
3 i
570 (continued)
The main unit step up transformer, high voltane uwitclilun equipment and ansocInted ra c i.] [L ie:. A1::o incluth d dre contes a:.nocla-ted w Lth t ranumI: slon nwit.chy. d enmmen f ac.11 I-t Ic:a t h.i t a re owned by tht-j o i n:. ownern or the D-n Genera t lnn Unit u.
(Tho:se nwllchyar d common fac !1 I t Ie:< uot owned by the D-11 General I nn Un L Ln' joint owner.s are covered by provlnion: o l' the CAPCO Trannmi:. lon A;; ret ments.)
184 Clearlug Account.n Cont of labor and materials used and expenses incurred in other activities which are 'di-rectly related to Davis-Besse Power Station and which are charged to TE clearing account:
u111 he d1ntributed mont hly to API'ropriat e Davis-liesse Powcr Station operation and saintenance expense accounts in accordance with alle:-ar-f an r,f r. e.ntane: as determined by TE.
TE will periodically review thece allocation percentages for reasonableness.
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y Section II 3.
Allocation Codes and Explanations Allocation of Con on Costs Between Davis-Besse Units Nos.
1, 2 and 3 The basis for allocating. com$on costs between Davis-Besse Units Nos. 1, 2 and 3 is as follows:
CODE C
The portion of the costs to be allocated to Davis-Besse Unit No. I shall be the cuotient of (a) the prevailing Ket Demon-strated Capability of Davis-Besse Unit No. 1 divided by (b) the sun of the Net Deronstrated Capabilities of Davis-Besse Units Nos. 1, 2 and 3.
The portion of the costs'to be allocated to Davis-Ecsse Unit No. 2 shall be the quotient of (a) the prevail-ing Net Deconstrated Capsbility of Davis-Besse Unit So. 2 divided
-by (b) the sua of the. Set Deconstrated Capabilities of Davis-Besse
, Unit Sos. 1, 2 and 3.
The portion of the costs to be allocated to Davis-3 esse Unit No. 3 shall be the dif ference between (a) the total cost cinus (b) that portion of the costs allocated to Davis-Besse Units Nos. 1 and 2.
Allocation of Costs Among CEI, DL, OE, PP and TE The bases for allocating arong the owners the sum of those costs which are charged to Da.is-Scsse Unit So. 1, Davis-Besso Unit No. 2, ands Davis-lesse Unit No. 3, and the portion of the cocoon costs which are allocated to Davis-Sesse Units Mos. 1, 2 or 3 are as follows:
01 The cost shall be allocated among the Companics in proportion to their respective ownership interests in Unit No. 1 namely:
51.36% to.CEI and 48.62% to TE.
02 The costs shall be allocated among the Companies in proportion to their respective cunership interests in Unit No. 2 namely:
24.47% to CEI, 13.74% to DL, 35.60% to OE, 6.28% to PP and 19.91% to TE.
03 The costs shall be allocated among th: Companies in proportlan to their respective ostnership in:erest s in Unit No. 3 namely:
E 24.47% to CII, 13.74% to DL, 35.60% t.: OE, 6.23% to PP and 19.91% to TE.
hV The costs during the current conth shall be allocated to an our.ing Cocpany in proportion to a fraction, the nunerator of
-a which is the variable portion of the BTU input to the main
'- g unit turbine used to produce the kilowatt hours of energy i __j taken by that Corpany during the current month, and the denom-inator of which is the variable portion of the BTU input used in producing all of the kilot:att hours of energy taken by all
~~J of the Cen. panics during that s ame '. ton t h, the:,e i,TU inputs being calculated hourly and accumulated ca.ithly in accordance vith the principles of alle:ation of heat consumption set
__l forth in Sectien III.
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'Section II B.
Allocation Codes and Explanations (Continued)
Allocation of Costs Among CEI, DL, OE, PP and TE (Continued)
KY The costs during the current month shall be allocated to an owning Cocpany in proportion to a fraction. the numeratcr of which is the total BTU of energy consumed by that Company during the preceding twelve month period and the denocinator of which is the total BTU of energy consumed by all Companies during that sane preceding twelve month period.
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Section III.
Fuel Nuclear fuel caterials required for ef ficient operation of the Units
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shall be procured by TE and owned or leased by the Owners of Davis-Besse Units Nos.
1, 2 and 3 in percentage shares equaling the respective Owner's ownership share in the Unit in which the fuel materials are intended to be used.
Charges for owned fuel caterials in nanufacture, storage, transit, cooling or reprocessing, but not in the reactor for heat production, shall ba recorded in Accounts 120.1 (Nuclear fuel in process of refine-cent, conversion, enrichnent and fabrication), 120.2 (Nuclear fuel caterials and asseablies-Stock account) and 120.4 (Spent nuclear fuel) as appropriata upon inforaation supplied by TE.
The cost of nuclecr fuel installed in the reactor shall be recorded in Account 120.3 (Nuclear fuel asse:blies in reactor).
Nuclear fuel lease payuents not related to burnup including:
(a) the payaents cade applicable to accounting periods prior to start of burnup of tha leased nuclear fuel and (b) the payaents nado applicable to accounting periods which connance af ter the burnup of the leased nuclear fuel has commenced shall bc charged to Acceent 186 (Miscellaneous deferred debits).
Su(h deferred expenses s'rall be anortized over the life of the fuel en the l
basis of energy produced.
At the beginning of each conth, each Owner's unamortized interest in owned nuclear fuel naterials and/or def erred nuclear fuel lease expense cust be equal to that Owner's cunership interest in the Units.
Adjust-ments to maintain such proportional unanortized interest will be sade conthly in accordsuce with Section "I of this Uxhibit.
The following basic principles shall govern the calculation of depletion (amertiration) of fuel asse:blies installcd in the reactor for hea; production unless Th2 Public Utilities Cc ission of Ohio deter:ines that other calcul.ition nethods and/or forraiae should be used.
In such event, this Sectina III will be revised to reflect these P. U. C.C. rcquire-cents.
1.
Nuclear fuel csseablies sh:ll be considered to be producing het.t only during periods of zero or positive net genera-tion.
2.
During periods of negative.et generation, it will be considered that installed nuclear fuel assemblies are not producing heat and ate not thus consumed.
Durin; periods of nep tive net generation, records of station service electric cuergy supplied by the system shall be.:.aintained and the participantr. in the unit shall be invoiced for such electric energy in propction to their invcs c.ent
1 Section III.
Fu.1 (Continued) responsibilities in the Unit at the operating owner's systea average production cost (including net gurchased pcuer costs) during the current calendar month adjusted to exclude the output and cost during the current calen-dar conth cf the Unit to which such station service energy was supplied.
3.
During periods of zero or positive net generation, the co:poacnts of consucption of heat from nuclear fuel asse blies shall be considered to consist of a fixed heat consucption cocponent and a variabic heat consumption cocponent. The ccaponents of heat consumption are illus-trated by the current Input / Output curve for each Unit as agreed to by the Owners.
The fixed portion of heat consutption consists of the heat produced by the reactor required to supply station service electric energy plus heat losses in the plant.
4.
During periods of zero or positive net generation, the
. fixed and variable portions of the total unit heat consusp-tica shall be calculated on an hour by hour basis. The fi::ed portion of the unit heat consu.mption shall be the product of service hours accumulated during peri:ds of zero or positive net generation times the fixed unit heat consunption as indicated on the current Input /0e:pu:
s curve for c:ch Unit as agreed to by the Owners.
The varitble portion of the unit heat consumption shall be the total not main unit generation in Mychr/hr carverted to BTU /hr, excluding the fixed unit heat consump:ica, utilizing the relationship between Mw hr/hr versus BTU /hr cs represented e
on the current Input / output curve for each Unit as agreed to by the Owners..The total unit heat consumption shall be the sun of fixed and variabic portions of the unit hea: consumption.
The pcrtion of the cost of nuclear fuel concused to be consid-ered to be attributable to fixed unit heat consumption shall be :he total cost' of nuclear fuel consumed times a fraction the l
nuntrator of which is the nanthly fixed unit heat consuration ann the denoninator of which is the total monthly unit heat cor. s ucp r io n.
The portion of the cost of nuclear f uel consumed to ae attributable to variable heat consumption shall he the total cost of nuclear fuel consumed minus the portion of the cost of nuclear fuel consurced attributable to fixed unit heat consunption.
5.
In deternining the cost of nuclear fuel consumed, TF shall calculate costs unir.g ctortization in propartion to c1ain unit heat consunption, such cost taking into account i
Note:
If estinated costs are used for.the current month's calculation, an adjuntnent, base.1 upon the deviation of estinated vs. ac t t.M costs, will. be m de in the next succeeding month's billin;;.
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Section III.
Fuel (Continued) the original acquisition cost of the paterials and serv-ices required to provide the fuel as originally installed, the predicted total heat output of the assemblies and the esticated net value of salvage caterials.
TE shall cal-culate such cost of nuclear fuel consumed using methods and/or conputer codes considered acceptable by the Companies fo'r this purpose.
6.
For owned nuclear fuel, the centhly nuclear fuel expense shall be determined by the forcula FC
=E (A - S -)
c
_ c, e
i f
where:
Nuclear Fuel expense during the current account-FC
=
c ing month.
The energy, in 3tu, produced during the current E
c accounting nonth.
The energy, in 3:u, expected to be produced E,
=
from t'ne beginning of the current accounting nonth until the estinated end of life of the' fuel.
A The unamortized value of the fuel as reflected
=
C by the difference betwaen the balances in Accounts 120.3 (h'uclear fuel assemblies in reactor) and 120.5 (Accumulated provision for amortization of nuclear fuel assemblics) at the beginning ci the current accounting month.
S Anticipated salv:ge value of the fuel uith
=
g related deductions including but not limited to shipping, reprocesring cnd waste disposal Costs.
For fuel consumed, each Owner shall debit Account 518 (Nuclear f uel expent.e) and credit Account 120.5 for its
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share cf fixed and variable nuclear fuel expenses calculated in accord:nce with paragrcphs 4, 5 and 6 above.
i 7.
The monthly nuclear fuel expense for leased nuclear fuel consured is cemposed of 1) a burnup expense related to energy resource consumptica cud 2) anortization of accu-culcted deferred exp:nses.
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I Section III.
Fuel (Continued)
/
A.
Monthly Burnup Expcase,
/
The monthly burnup expense shall be calculated as follows:
B
=E (C - S)
C
_C C
f Eg.
where:
B Burnup expense for the current accounting
=
month.
E The energy, in 3:u, produced during the current
=
accounting nonth.
Ef The energy, in Btu, expected to be produced
=
from the beginning of the current accounting conth to the end of life of the fuel.
C
=
The lessor's net investment (acquisition cost as defined in the lease agreeacnt less accumu-lated burnup expenses prior to.the current accounting conth) at the beginning of the 4
current accounting month.
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S f
Anticipated salvage value of the fuel with
=
related deductions including but not limited to shipping, reprocessing and waste disposal costs.
B.
Monthly Amortization of Deferred Expense The nonthly amortization of Deferred Expense shall be calculated as follous:
=E (D
+D)+R (C + C(c + 1)... + C )
c e
p a
c c
f f
where:
DA The amortization of deferred expense during the
=
current accounting conth.
E The energy, in Etu, produced during the current
=
accounting nonth.
E g The energy, in Stu, expectcd to be produced
=
from the beginning of the current accounting nonth to the end of life of the fuel.
x Section III.
Fuel (Continued)
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l D
The unacortized portion at the beginning of the
=
E current accounting conth of the deferred expense related to the period prior to the beginning of cotmerical operation of the leased nuclear fuel.
D The unamortized portion at the beginning of the
=
current accounting conth of the deferred expense related to the period after the beginning of commercial operation of the leased nuclear fuel.
E R
The current lease rate as defined in the lease
=
s_
agreement expressed as the decinal equivalent of percent per conth.
l C
The, lessor's net investeent (acquisition cost as defined in the lease agreenent less accumu-lated burcup expanses prior to the current accounting month) at the beginning of the
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current accounting conth.
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C(e + 1),... + Cf The estinated lessor's not investment at the
- s-
=
beginning of each of the succeeding conths following the current acnth until repr: cessing or other dispositien occurs.
The conthly burnup expense shall be charged to Account 518 (Nuclear fuel expense).
The conthly amortization of deferred expense shall be charged to Account 518 and crecited to Account IS6 (Misopilaneous deferred debits).
8.
TE shall supply fuel expense data only for sharable costs inc.arred for the benefit of all owners.
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Section IV.
Materials and Supplies Materials and supplies required for the operation and maintenance of the Units shall be procured by TE and will be charged to Account 154.
Prior to the commercial operation date of Davis-Besse Unit No. 2, the caterials and supplies inventory at the site will be owned by owners of Davis-Besse Unit No. 1 in proportion t'o each Owner's respective ownership interest in Unit No. 1.
The Davis-Besse Unit No. 2 joint bank account will be billed for any materials and supplies which are used from this inventory in the construction and preliminary operation of Davis-3 esse Unit So. 2.
Payments received for such materials and supplies shall be credited to the Ovners of Davis-Besse Unit No. 1 in proportion to each.
Owner's respective ownership interest in Davis-Besse Unit No. 1.
Ef fective with the conmercial operation date of Davis-Besse Unit No. 2, the ownerc, hip of the caterials and supplies inventory will be adjusted so that the Ow.ers of Davis-Sesse Units Nos. I and 2 uill cwn the caterials and supplies inventory at the site in proportion to each Owner's re-spective waighted average percentage ownership in the two units.
Infor-mation in support of the payre.ents required to cf fe,ct such adjustment in ownership will be supplied by TE.
P.onthly materials and supplies usage shall be credited to Account 154 and charged to the appropriate Operation and Maintenance expense accounts, as described in Section II3.
s Prior to the concercial operation date of Davis-5 esse Unit No. 2, each owner's share of the catorials and supplies inventory at the beginning of each conth cust be equal to that Owner's owactship interest in Davis-Besse Unit So, 1.
Ef fective with the cor creial operation date of Davis-lesse L' nit No. 2, each Owner's share of the caterials and supplies inventory at the beginning of each nonth cust be equal to that Cvner's weighted average porcentage ownership interest in the two units.
Adjust-eents to maintain !;uch propertional ownership will be cade :.onthly in accordance with Scetion VI of this exhibit.
The above provisioas are applicable to Davis-Besse Unit Nc. 3 as they are written for Unit No. 2, except that Unit No. 3 is compared to Units Nos. I and 2 comb:.Ted.
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y Section V.
Other Expenses For inter-Company billing purposes, labor and caterial additive costs at current rates prevailing at TE as adjusted from time to time shall be added to 'the labor and material components of operation and caintenance costs of the Davis-3 esse t' nits Nos. 1, 2 and 3 to which such rates are applicable and shall be shared by the Coapanies on the sace bases on which the pricary labor and material c'osts are shared.
In addition, an allocation vill be made of Account 556, System Control and Load Dispatching costs related to production, and Account 557, other Production Expenses.
These costs vould 'ce allocat'ed to Davis-Besse Units Nos. 1, 2 and 3 on a direct basis where a direct relationship exists, or generating capability ratio when a direct relationship does not on a net exist.
Account 556 will include only those load dispatching costs incurred by TE that are attributable to the Davis-3 esse l' nits Nos. 1, 2 and 3.
Included in Account 557, other Produe:ica Expenses, are such itens as insurance premiums and recoveries and other production expenses not directly assignable to the other production accounts.
These costs included in Accoun: 557 tiay be charged directly where a direct relation-ship exists or, if not, they may be allocated on a net generating capa-bility basis.
The invoice will identify acounts billed that were included in Account 557.
For inter-Company billing purposes, administrative and general expenses shall be alloca:ed to Davis-Besse Units Mos. 1, 2 and 3 on the basis of the composite three-year noving average ratio for TE calculated at t.he end of each calendar year in accordance with the following forcula to' become effective on July 1 of the following year.
Lal (1 + p/P) + 0,1 (L -La2) (1 + P/r) + (O -0a2) g e
In which:
L and O g
g the 3-year sums of direct labor expenses and
=
j direct other-than-labor expense, respectively charged 'to the.follouing accounts:
1.
Account 920, Administrative and general salaries.
2.
Account 921, Office supplies and expenses.
3.
Account 922, Administrative expenses transferred
- Credit.
(1 + p/P) =
a cost ratic by means of which those expenses directly associated with payroll (labor additives) may be added to direct labor charges.
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Section V.
Other Expenses (Continued) i l
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p the 3-year sum of the following labor additives:
=
x 1.
Payroll Taxes Federal Old-age Benefits Federal Unemployment Insurance State Unemployment Insurance
)lll 2.
Workmen's Compensation and/or Injuries and Damages
]
(Payroll related costs only) 3.
Employee Pensions and Benefits (Account 926) 4.
Pay for Time Not Worked l
E clude any labor additives which are included with the basic direct 3r charges, examples of which might be " Pay for time not worked" or troll taxes".'
P the 3-year sum of the total payroll with which
=
the above labor additives are associated.
s L and 0 the 3-year sums of direct labor expense and
=
e
~~T-direct other-than-labor expense, respectively, charged to all operation and maintenance expense accounts except Fuel Accounts 501, 518 and 547 for the entire Ccmpany.
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a2 and a2 the 3-year sums of direct labor expense and
=
direct other-than-labor expense, respectively, charged to all Administrative and' General Expense Accounts 920 and 932, inclusive.
The amount of administrative and general expenses to be allocated to each Company during a given period shall be the product of the above ratio r.ultiplied by the total cperation and maintenance expenses, exclud-ing Account 518, allocated to the company for that period.
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..o Section VI.
Billing With respect to the procurement of owned nuclear fuel materials and materials and supplies for the Units, TE shall pay to the vendors all payments as they become due, and shall in turn promptly bill the other Owners of the Units for their respective shares of such payments.
i With respect to leased nuclear fuel materials for the Units, TE shall pay to the lessors all payments as they become due, and shall in turn promptly bill the other Owners of the Units for their respective chares of such payments.
TE will bill the Owners of Davis-Besse Units Nos. 1, 2 and 3 monthly for their' respective shares of the operation and maintenance expenses for the Units.
Since the Owners of the Units will own nuclear fuel inventories as well as materials and supplies inventories in proportion to their ownership interests in the Units, the owners will be given credit on the monthly bill for their share of the above assets which were consumed or amortized and charged to expense during the billing period.
Included in the monthly bill, if. necessary, will be transfers between owners of such assets necessary to maintain at the beginning of each month the Owner's ounership interests in these assets in proportion to their ownership interests in the Units.
The Duners will also be given credit on the monthly bill for their share of deferred expenses which were amortized and charged to expense during the billing period.
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Docket Number 50-346 License Number NPF-3 L
Serial Number 2568 AMENDMENT NO.1 TO THE NOVEMBER 21,1977 1.
DAVIS-BESSE UNIT NO.1 OPERATING AGREEMENT TO CHANGE UNIT OPERATOR FROM TE TO FIRSTENERGY NUCLEAR OPERATING COMPANY (8 pages follow) 4 l
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U A
AMENDMENT NO.1 TO THE NOVEMBER 21,1977 DAVIS-BESSE UNIT NO 1 OPERATING AGREEMENT TO CHANGE UNIT OPERATOR FROM TE TO FIRSTENERGY NUCLEAR OPERATING COMPANY THIS AGREEMENT effective as of the by and between The Cleveland Electric Illuminating Company ("CEI"); Toledo I:dison Company ("TE"), hereinafter referred to as the Participants and FirsGneisy N.iclear
. Operating Company ("FENOC"), all of which are Ohio Corporations and wholly-owned subsidiaries of FirstEnergy Corp ("FirstEnergy"),
W I T N E S S E T II:
WHEREAS, the Participants entered into an Operating Agreement dated November 21,1977, hereinafter referred to as the " Prior Agreement", which provided j
among other things for the operation and maintenance of the Davis-Besse Unit No.1
(" Unit No.1");
WHEREAS, as a result of the April,1986 affiliation oetween CEI and TE and the fonnation of Centerior Energy Corporation
(" CEC"), the Participants became subsidiaries of CEC, thereby continuing all terms and conditions of the Prior Agreement; WHEREAS, as a result of the November 8,1997 merger between CEC and the Ohio Edison Company, resulting in and the formation of FirstEnergy, the Participants became wholly-owned subsidiaries of FirstEnergy;
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l WHEREAS, as a result of this merger, the Participants desire to add FirstEnergy as a party to this Amendment No. I to the Davis Besse Unit No. I Operating Agreement; and WHEREAS, the Participants and FirstEnergy desire to ratify the terms and
{
conditions of the Prior Agreement as if herein restated subject to the following amendments, as hereinafter set forth; l
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein set forth, the Participants, FirstEnergy and FENOC agree as follows:
1.
Section I remains as written.
2.
Section 2 remains as written.
3.
Section 3 is amended and shall read as follows:
On the first day of the calendar month immediately following the calendar month during which the Nuclear Regulatory Commission ("NRC") authorizes the transfer of Unit No.1 operating license to FENOC, TE shall cease to be the operator of Unit No. I and FENOC shall in its place becorne operator of Unit No.
1 pursuant to this Agreement and NRC authorization. Therefore and thereafter, FENOC, on behalf of the Participants and FirstEnergy, shall operate and maintain Unit No.1, provide necessary materials and supplies including fuel as provided in Section 12, and make any additions, replacements and retirements with respect to Unit No.1, taking all steps which it deems necessary or appropriate to carry out the provisions of this Agreement, all in accordance with sound engineering and operating principles and practices and applicable laws, codes and regulations; l
provided that, with respect to Unit No.1, additions, replacements and retirements l
involving material changes in capability, useful life, basic methods of operation of Unit No. I and similar matters, and not included in the budget with respect to Unit No. I approved in accordance with Section 13 hereof and not of any emergency nature, shall be made only by the Participants and FirstEnergy. Retirements with respect to Unit No.1 shall be effected only in manner consistent with any l
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3 applicable provisions of the respective mortgage indentures of the Participants and/or FirstEnergy (or any financing lease relating to Unit No. I and the interests therein to which a Participant or FirstEnergy is a party),
4.
Section 4 is amended and shall read as follows:
1 The Participants and/or FirstEnergy shall be entitled to the hour-to-hour net operating capacity of Unit No. I as determined by FirstEnergy.
5.
Section 5 is amended and shall read as follows:
FENOC will keep the Participants and/or FirstEnergy informed as to the expected maximum hour-to-hour net operating capacity of Unit No. I permissible for proper operation of Unit No.1, as determined by FENOC, as it may vary in accordance with conditions existing from time to time. Each Participant and/or FirstEnergy shall reserve its desired shar' of capacity in Unit No. I and schedule e
its desired share of energy associated therewith, on an hour to-hour basis, up to the limits of its generation entitlement share, all in accordance with applicable FirstEnergy system planning procedures. Subject to necessary outages or reductions in capability, Unit No. I shall be operated by FENOC so as to produce capacity and energy equal to the sums of the capacity reserved and energy scheduled by the Participants and/or FirstEnergy, all in accordance with applicable FirstEnergy system planning procedures. FENOC shall exercise its best efforts to achieve a balance between the scheduled output of Unit No. I and its actual output.
6.
Section 6 is amended and shall read as follows:
FENOC will keep the Participants and/or FirstEnergy informed as to the expected minimum net generation for proper operation of Unit No. 1, as determined by FENOC, as it may vary in accordance with conditions existing from time to time.
4 7.
Section 7 is amended and shall read as follows:
The Participants and FirstEnergy authorize FENOC to provide and FENOC shall provide a staff of competent engineering, supervisory, operating and maintenance, and other appropriate personnel to operate and maintain Unit No.1.
To ensure that technical qualifications of FENOC will be at least equivalent to those provided by TE, the TE employees on site at Unit No. I at the time FENOC becomes operator hereunder, will be transferred to and become employees of FENOC. Such staff and all other employees of FENOC performing work in connection with the operation and maintenance of Unit No.1 shall be, and for all purposes shall be considered to be, employees only of FENOC. Such staff and employees shall receive their instructions and orders only from appropriate officials of FENOC.
8.
Section 8 is amended and shall read as follows:
Subject to any applicable restrictions contained in Sections 3 and 12, the Participants and FirstEnergy hereby appoint FENOC as their agent in respect of Unit No.1, and FENOC agrees as the agent of Participants and FirstEnergy and as principal on its own behalf, to negotiate, execute and enforce contracts (including purchase order contracts), either in FENOC's name only or in the name of FENOC as agent for the Participants and/or FirstEnergy, providing for the purchase of materials, equipment and services for the operation and maintenance of Unit No.1, including the provision of nuclear material and nuclear fuel assemblies in connection with the operation of Unit No. I and the obtaining of necessary govemmental authorizations therefor.
9.
Section 9 is amended and shall read as follows:
Scheduled maintenance of Unit No. I shall be performed by FENOC in accordance with the needs and requirements of FirstEnergy.
10.
Section 10 is amended and shall read as follows:
i FENOC shall keep the Participants and FirstEnergy infomied conceming the operation and maintenance of Unit No.1 and FENOC plans with respect thereto.
The Participants and/or FirstEnergy shall consult from time to time with FENOC as to the operation and maintenance of Unit No.1.
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i The Panicipants and/or FirstEnergy will provide and maintain communication, telemetering and control equipment connected to FirstEnergy's System Dispatch Office necessary to monitor Unit No. I and to integrate generation from Unit No. I with the control of FirstEnergy's other sources of i
generation. Such equipment and its operation shall be subject to, and shall not l
interfere with, FENOC's control of Unit No. I and shall not unduly affect the l
operation of Unit No.1.
4 11.
Section 11 is amended and shall read as follows:
The Participants and FirstEnergy will cooperate with FENOC in all activities in connection with Unit No.1, including, without limitation, the filing l
of applications for authorizations, permits and licenses, and the execution of such other documents as may be reasonably necessary to confirm FENOC's authority l
to act for them and the assumption by them of their obligations to be incurred pursuant to this Agreement.
12.
Section 12 is amended and shall read as follows:
The Participants and FirstEnergy understand and recognize that nuclear material and nuclear fuel assemblies for Unit No. I may be the subject of agreements between the parties hereto and entered into prior to the 1997 merger, which agreements related to or result from joint planning, scheduling and purchasing by the Participants hereto as a part of nuclear fuel arrangements for Unit No. I and other units owned by the Participants and FirstEnergy. Subject to such agreements, FENOC shall manage, schedule deliveries fc,r and handle fuel to Unit No.1, including handling of spent fuel from shipment off-site through final disposal of radioactive wastes, whether under contracts entered into by FENOC with third parties or under contracts entered into prior to FENOC becoming the operator of Unit No. I by the Participants with third parties.
13.
Section 13 is amended to read as follows:
FENOC will prepare an annual Business Plan and prepare and revise from time to time as appropriate and furnish to the Participants and FirstEnergy an annual budget showing by months to the extent possible, the expected operating and maintenance expenses, capital expenditures and retirements with respect to Unit No.1. FENOC will also prepare, revise from time to time as appropriate and fitrnish to the Participants and FirstEnergy, projections of such budgets for such reasonably longer periods of time as may be requested by the Participants and/or FirstEnergy.
6 FENOC will make such records and keep such accounts, consistent with sound accounting practices, and will assist the Participants and FirstEnergy to record on their books any transactions provided for herein, in confonnity with the Unifonn System of Accounts prescribed for Public Utilities Commission and Licensees by the Federal Energy Regulatory Commission and any state commission having jurisdiction, as such systems of accounts are now in effect or are hereafter modified of amended. The Participants and FirstEnergy shall have access at all reasonable time to such records and accounts and FENOC will furnish copies of all or any part thereof as requested. FENOC shall preserve and maintain the originals of each of such records and accounts for at least such periods of time as FirstEnergy may require, having in mind the requirements of regulatory authorities having jurisdiction and the policies and practices of FirstEnergy with respect to retention of records.
FENOC shall prepare and furnish each Participant and FirstEnergy with copies of continuing property records with respect to Unit No.1 in such form as is agreed to be reasonably necessary to confonn to the accounting requirements of the Participants.
I 14.
Section 14 is amended to read as follows:
All costs and expenses contemplated by this Agreement associated with the operation and maintenance of Unit No.1, shall be provided by the Owners and FirstEnergy.
The accounting methods and practices in use by each of the Owners and FirstEnergy shall be used for purposes of this Agreement.
15.
Section 15 is hereby deleted in its entirety.
16.
Section 16 is hereby deleted in its entirety.
17.
Section 17 is hereby deleted in its entirety.
18.
Section 18 is hereby deleted in its entirety.
19.
Section 19 is amended to read as follows:
FENOC shall through FirstEnergy, arrange for and maintain appropriate insurance to cover (a) risk of damage to or loss of Unit No. I and materials and supplies held for use in connection therewith, including risk of damage or loss due to a nuclear incident, (b) liability for bodily injury to, or death of, or damage to property of third persons, including liability due to a nuclear incident, arising out of the ownership, operation, use or maintenance of Unit No.1.
7 20.
Section 20 is hereby deleted in its entirety.
21.
Section 21 is hereby deleted in its entirety.
22.
Sectim 22 is hereby deleted in its entirety.
23.
Section 23 is hereby deleted in its entirety.
24.
Section 24 remains as written.
25.
Section 25 is hereby deleted in its entirety.
26.
Section 26 is amended and shall read as follows:
The costs for decommissioning of Unit No. I shall be funded by the Participants and/or FirstEnergy in accordance with the requirements the NRC Regulations at -10 C.F.R. Section 50.75 and other applicable NRC rules, regulations and orders regarding decommissioning and the applicable orders regarding decommissioning funding of the Public Utility Commission of Ohio.
27.
Section 27 is hereby deleted in its entirety.
28.
Section 28 is amended and shall read as follows:
This Agreement shall be fully effective as of the date so indicated in Section 3 and shall remain in full force and effect with respect to Unit No. I until the date of Unit No. I retirement or the date upon which the Participants and FirstEnergy terminate this Agreement, whichever first occurs.
29.
Exhibit A is hereby deleted in its entirety.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 1 to the Davis-Besse Unit No.1 Operating Agreement to be executed by their duly authorized officers this day of
,1998.
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8 The Illuminating Company FirstEnergy Nuclear Operating Company, (formerly known as The Cleveland a subsidiary of FirstEnergy Electric Illuminating Company, a utility subsidiary ofFirstEnergy)
-By:
By:
The Toledo Edison Company, a utility j
subsidiary of FirstEnergy l
By:
)
i FirstEnergy Corp., the parent holding Company
. of the Hluminating Company and The Toledo l
Edison Company l
J By:
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