U-602973, Forwards Proprietary Agreement Between PECO Energy & Ilpr, Which Allows Ilpr to Benefit from Operational & Nuclear Plant Recovery Experience of PECO Energy Personnel. Proprietary Info Withheld 10CFR2.790(b)(1)

Forwards Proprietary Agreement Between PECO Energy & Ilpr, Which Allows Ilpr to Benefit from Operational & Nuclear Plant Recovery Experience of PECO Energy Personnel. Proprietary Info Withheld 10CFR2.790(b)(1)

ML20217M349
Person / Time
Site:	Clinton
Issue date:	04/01/1998
From:	Walter MacFarland ILLINOIS POWER CO.
To:	Matthews D NRC (Affiliation Not Assigned)
Shared Package
ML20036E285	List: U-602973, Forwards Proprietary Agreement Between PECO Energy & Ilpr, Which Allows Ilpr to Benefit from Operational & Nuclear Plant Recovery Experience of PECO Energy Personnel. Proprietary Info Withheld 10CFR2.790(b)(1)
References
U-602973, NUDOCS 9804080081
Download: ML20217M349 (5)

Text

llunoes Power Compan,

- *

• Clinton Pomn Station

. P O Boa 678 e

• Chnton. IL 61727 Tel 2 i 7 935 *A23 i au 717 935 4632 Walter G. MacFarland (V Sernor Vic.e Presroeut and Chief tJoclear Ottiter ILLIN#iS A 20 An Illinova Company April 1, 1998 Docket No. 50-461 10CFR50.80 10CFR2.790 U.S. Nuclear Regulatory Commission ATTN: Mr. David B. Matthews, Deputy Director Division of Reactor Programs Management Mail Stop 11 Al One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738

Subject:

Management Services Anreement at Clinton Power Station

Dear Mr. Matthews:

By letter dated January 5,1998 (U-602903), Illinois Power informed the NRC that it was entering into a Management Services Agreement with PECO Energy for nuclear operational support at Clinton Power Station (CPS). Subsequently, by letter dated January 23,1998 (U-602918), Illinois Power transmitted proprietary copies of the Letter ofIntent and draft Management Services Agreement to the NRC. During a teleconference conducted March 24,1998, between members of the NRC and Illinois Power, the NRC requested a copy of the final Management Services Agreement between Illinois Power and PECO Energy. Hence, this letter serves to transmit, as requested by the NRC, a proprietary copy of the final Management Services Agreement between Illinois Power and PECO Energy.

Management Services Anreement with PECO Energy On January 2,1998, Illinois Power and PECO Energy executed a Letter ofIntent confirming a mutual intention to enter into a more defmitive Management Services Agreement by which PECO Energy will provide to Illinois Power certain management, l

technical, and support services to CPS on behalf of, and subject to the direction of, Illinois Power. This support allows Illinois Power to benefit from the operational and nuclear Qg plant recovery experience of PECO Energy personnel. 1 bqo\

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. U402973 Page 2 PECO Energy provided, as of January 5,1998, a Chief Nuclear Oflicer (CNO),

Mr. Walter G. MacFarland, IV, to serve as the senior nuclear manager at CPS, reporting directly to Mr. Larry D. Haab, ChiefExecutive Officer and President ofillinois Power.

Subsequently, Mr. MacFarland has been elected to the Illinois Power Board ofDirectors.

While Mr. MacFarland remains an employee of PECO Energy for purposes of compensation and benefits, he will exercise authority in the Illinois Power organization on behalf ofIllinois Power, subject to the direction of the Illinois Power ChiefExecutive Officer. He is authorized and empowered by Illinois Power to perform all of the obligations of the position.

The Management Services Agreement allows PECO Energy to supply experienced nuclear managers to fill key positions to assist Illinois Power in the recovery of CPS. To date, nine management positions have been filled by PECO Energy employees. The management changes to date do not require changes to the plant Technical Specifications.

Reaulatory Anoroval Illinois Power has concluded that neither the Management Services Agreement with PECO Energy nor the resulting specific management changes require NRC approval.

Illinois Power remains the operating licensee for CPS, with ultimate authority to control, and responsibility for, safe plant operation and regulatory compliance. This relationship is clearly established in the Management Services Agreement between Illinois Power and J PECO Energy.

For the information of the NRC, a copy of the proprietary Management Services Agreement is provided as Attachment 2 to this letter.

The Management Services Agreement defines the relative roles ofIllinois Power and PECO Energy. The relationship is characterized by the following:

. Experienced nuclear managers from PECO Energy will assume positions in the Illinois Power organization for CPS. Although PECO Energy will remain responsible for compensation and benefits of these individuals, the individuals will act on behalf ofIllinois Power for operational and functional purposes. The intent is to allow lilinois Power to benefit from the proven management, operational, and recovery experience of"FCO Energy by integrating them into the Illinois Power

.. organization.

• By express provision, Illinois Power will remain the NRC operating licensee for CPS with exclusive authority to operate and maintain CPS, and with exclusive responsibility for all regulatory matters. Illinois Power will be responsible at all times for providing overall management direction of all operational activities at

- CPS, including direction of PECO Energy employees and consultants assigned to provide services under the Management Services Agreement. In this regard, Mr.

U-602973 Page 3 MacFarland, IV, as the Senior Vice President and CNO, will repon directly to the Chief Executive Officer and President ofIllinois Power.

. Illinois Power retains exclusive authority and responsibility to derme the economic life of the plant, to determine when the economic life of the plant has ended, and to retire and decommission the plant.

. Management personnel provided under the Manageraent Services Agreement must ,

be approved by Illinois Power. In addition, Illinois Pcwer reserves the right to I request and demand that individuals assigned to provide management services under the Management Services Agreement be removed for cause.

• lilinois Power retains the right to terminate the Management Services Agreement. 1 This right is subject to cenain notification provisions, and allowances are made for I orderly transition of responsibilities and work in progress. However, Illinois j Power is entitled to terminate the agreement immediately if, in the sole judgment  !

ofIllinois Power, the actions of PECO Energy or its employees constitute an l immediate threat to safety, adverse regulatory consequences, or harm to the plant.

1 e llSnois Power, as the NRC licensee and plant owner, will remain solely responsible I for payment of any civil penalties issued to Illinois Power arising under the Atomic Energy Act, the Energy Reorganization Act, or the regulations promulgated l thereunder. However, the performance incentives that are built into the fee structure for PECO Energy could result in financial consequences to PECO Energy if civil penalties are issued to Illinois Power or other regulatory goals are not met.

. Licensed operators in the CPS main control room will remain solely employees of Illinois Power.

In total, at all times during the term of the Management Services Agreement, Illinois Power will remain the licensed owner and operator of the plant. The provisions of the Management Services Agreement will assure that Illinois Power retains the necessary, i ultimate control over plant operations such that the NRC's licensing requirements are l maintained.

In addition, there is ample regulatory precedent involving similar arrangements for contract management services to support this conclusion. Several other licensees in the nuclear industry have utilized contract suppon to fill imponant management positions or to provide management teams. The situation at CPS will not be materially different.

1

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. U-602973 Page 4 Illinois Power rcquests that the attached proprietary Management Services Agreement be withheld from public disclosure on the grounds that this document contains privileged or confidential commercial or financial information. In accordance with 10 CFR 2.790(b)(1), an appropriate affidavit is attached.

Sincerely yours, n.

0 YMf.

kWalter G. MacFarland, IV Senior Vice President and ChiefNuclear Officer JFK/krk Attachments cc: NRC Clinton Licensing Project Manager (w/o attachments)

NRC Resident Office, V-690 (w/o attachments)

Regional Administrator, Region III, USNRC (w/o attachments)

Illinois Department ofNuclear Safety (w/o attachments)

Document Control Desk, USNRC D. A. Repka, Winston & Strawn (w/o attachments)

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• Attachment I

. to U-602973 George A. Ilunger, Jr., being first duly sworn, deposes and says:

1. I am Manager - Clinton Power Station at Illinois Power.

2. I have read the Management Senices Agreement between Illinois Power and PECO Energy.

i

3. The Management Senices Agreement contains confidential, privileged, or financial information which should be withheld from public disclosure pursuant to 10 CFR 2.790 based on the following:

a. The Management Senices Agreement has been held in confidence by lltinois Power and PECO Energy and has been disclosed only to authorized personnel from the two companies, their respective legal counsel, and legal counsel forjurisdictional regulatory bodies;

b. Except as provided in paragraph (a), the provisions of the Management Senices Agreement for which protection is sought are customarily held in confidence by Illinois Power; and

c. The Management Senices Agreement contains information which, if disclosed to the public, could adversely impact the proprietary interests ofIllinois Power and PECO Energy. This information, if disclosed to the public, could impact the ability of PECO Energy to negotiate terms and conditions in management services agreements for other nuclear facilities and thereby harm PECO Energy's competitive position. In addition, if this information is disclosed to the public, it could provide information to third parties who contract to provide services to Illinois Pcwcr with an advantage during contract negotiations with Illinois Power, thereby causing substantial economic harm to Illinois Power.

4. The foregoing has been prepared under my supenision and direction; I know the contents thereof; and that to the best of my knowledge and belief said letter, the associated attachments, and the facts contained therein are true and correct.

Date: This d/ day of March 1998.

Signed: M- epfd.

Georgf/A.llunger,Jr. () V l

l STATE OFILLINOIS l SS. )

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j Subscribed and sworn to before me this 3I day of March 1998.

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