View source for L-17-085, Supplemental Information Regarding Pending Application for Order Consenting to Transfer of Licenses and Approving Conforming License Amendments (CAC MF78066): Exhibit G, Pro Forma Income Statements

{{Adams
| number = ML17075A210
| issue date = 03/16/2017
| title = Supplemental Information Regarding Pending Application for Order Consenting to Transfer of Licenses and Approving Conforming License Amendments (CAC MF78066): Exhibit G, Pro Forma Income Statements
| author name = Belcher S
| author affiliation = FirstEnergy Nuclear Operating Co
| addressee name = 
| addressee affiliation = NRC/Document Control Desk, NRC/NRR
| docket = 05000412
| license number = NPF-073
| contact person = 
| case reference number = CAC MF78066, L-17-085
| package number = ML17075A209
| document type = Graphics incl Charts and Tables, Letter type:L
| page count = 9
| project = CAC:MF7806
| stage = Supplement
}}

=Text=
{{#Wiki_filter:CONFIDENTIAL        FINANCIAL     INFORMATION     TO BEWITHHELD        FROMPUBLIC DISCLOSURE          PURSUANT   TO 10CFR      2.390  AND  10 CFR   9.17 FENOC
 'ffi                                                                            341 White Pond Drive Akron, Ohio 44320 Sumuel L. Belcher                                                                  330-436-1 393 President & Chief Nuclear Officer March16,2017 L-17-085                                                                    10cFR50.80 10cFR50.90 ATTN: Document          ControlDesk U. S. NuclearRegulatory          Commission Washington,      DC 20555-0001

==SUBJECT:==

BeaverValleyPowerStation,UnitNo.2 DocketNo.50-412,LicenseNo.NPF-73 Supplemental      Information     ReqardinsPendinqApplication     for Order Consenting     to Transferof LicensesandApprovinq         Conforminq LicenseAmendments            (CACNo.MF 78066)
By letterdated     June24,2016(Accession        No.ML16182A155)       andsupplemented       by letters datedSeptember         13,2016(Accession      No.ML16257A235)       and December    15,2016 (Accession     No.ML163504077),         FirstEnergy NuclearOperating    Company(FENOC)acting as agentfor andon behalfof FirstEnergy          NuclearGeneration,     LLC(FENGen),      TheToledo EdisonCompany(TE),andthe OhioEdisonCompany(OE),submitted                       an application    to the NuclearRegulatory         Commission    (NRC)requesting    consentto the transferof the leasedinterestsin BeaverValleyPowerStation,UnitNo.2 (BVPS-2)andapprovalof an administrative    amendment        to conformthe licenseto reflectthe proposedtransfer(the Application).
On February21, 2017FirstEnergy            Corp,(FE)and FirstEnergy     SolutionsCorp.(FES)filed a U. S. Securities     andExchange       Commission   Form10-Kproviding    the FE andFES annualreportfor the fiscalyearendingon December31,2016. Theseresultsare comparedbelowto thefinancialinformation             providedin theApplication   currentlyunder NRCreview.In the tablebelow,the columntitled             "lNlTlAL"  reflectsthe financial information    reportedin the initialapplication    and relatedsupplements. Thecolumntitled "CURRENT"        reflectsthe mostrecentlyreportedFE and FES          financialinformation.
Enclosure    C to this lettercontainsconfidential  financialinformation.
Withhold    frompublicdisclosure    under10 CFR2.390and10 CFR9.17.
Uponremovalof Enclosure       C, this letteris uncontrolled.

CONFIDENTIAL      FINANCIAL      INFORMATION             TO BEWITHHELD         FROMPUBLIC DISCLOSURE       PURSUANT      TO 10CFR2.390AND1OCFR9.17 BeaverValleyPowerStation,UnitNo.2 L-17-085 Page2 INITIAL                          CURRENT FE Revenue                                  $ 1 5b i l l i o n                $14.56billion FE Net Income(Loss)                         $578million                       ($0.18billion)
FESRevenue                                  $5 billion                       $4.+billion FESNetIncome(Loss)                          $82 million                       ($5.+0billion)
FESProperty,    Plant,Equipmsnl(t)          $ 8 . Sb i l l i o n             $ 1. 1 3b i l l i o n FESStockholder     Equity                   $5.6billion(2)                   $218million Note(1)- NetProperty,Plant,andEquipment    in service.
Note(2)- Thisis thevaluethatshouldhavebeenusedin theoriginal           application.
Seethe FESstockholder   equitydiscussion   below.
The 2016FE and FESnet lossesandthe 2016FESnetproperty,plantandequipment valuesreflecta non-cashpre-taximpairment            chargeto FE of $9.2billion($4.1billionfor FES)in thefourthquarterof 2016to reducethe carryingvalueof certainassetsto their estimated fairvalue,including    long-lived  assets,suchas generating            plants(including the nuclearplants)and nuclearfuel,as wellas otherassets,suchas materials                         and supplies.
The powersupplyagreement        (PSA)betweenFENGenand FESdescribedin the Application remainsin place. Underthe PSA,FENGenreceivessubstantially                           all of its revenuefromFESon a costof servicebasis.Therefore,                     FENGen   will recover      its operating, maintenance    andcapitalcostsassociated               withthe BVPS-2interests         of 18.260/oand21.66%beingtransferred         fromTE andOE,respectively,              togetherwith        its othernuclearpowerfacilities.However,         dueto the impairment          describedin the preceding  paragraph,  whichimpactsthe assetbaseuponwhichthe equityreturn associated  withthe costof serviceformulain the powersupplyagreement                     is calculated, the FENGenfive-yearproformaincomestatement                      providedin ExhibitG to the original application hasbeenmaterially     affected;as such,an updatedproformaincome statement  is providedin Enclosure    C (titledproprietary          ExhibitG).
Thisfinancialinformation    is confidential financialinformation,         and FENOCrequeststhat Enclosure  C be withheld   frompublicdisclosure         pursuant     to 10 CFR2.390(a)(4)         and 10 CFR9.17(aXa). A redacted    versionof Enclosure            C suitablefor publicdisclosure        is providedin Enclosure   A. An affidavitsupporting           the requestfor withholding       Enclosure      C frompublicdisclosure    is providedin Enclosure        B.
Enclosure  C to this lettercontainsconfidential           financialinformation.
Withhold  frompublicdisclosure      under10 CFR2.390and10 CFR9.17.
Uponremovalof Enclosure          C, thisletteris uncontrolled.

CONFIDENTIAL       FINANCIAL    INFORMATION       TO BEWITHHELD         FROMPUBLIC DISCLOSURE        PURSUANT      TO 10CFR2.390AND CFR9.17  1O BeaverValleyPowerStation,UnitNo.2 L-17-085 Page3 Also,duringthe comparison       betweenthetwoyearsFENOCdetermined              thatthe FES stockholder  equityreportedin the originalsubmittalas $3.6billionshouldhavebeen reported as $5.6billion.In the December       15,2016supplement,       a similarissueexisted.
Thevaluethatwas reportedwas$3.6billionwhenit shouldhavebeenreportedas $5.41 billion.Thisadministrative    error(selecting  the incorrect  valuefromthefinancialreports) hasbeenenteredintothe FENOCcorrective             actionprogram.The currentFES stockholder  equityof $218millionreflectsthe impairment          chargesdescribed  above.
The 10-Kstatedthat FEShasenteredintoa two-yearsecuredcreditfacilitywith FE in whichFE provided     a committed   lineof creditto FESof up to $500millionand$200million of suretycreditsupport.Likewise,      the $400millionfinancialsupportagreement        fromFES to FENGenhasbeenmaintained.
Notwithstanding    the notedimpairment,    the conclusion    of the keyFESfinancial qualificationinformation    relevantto the proposed    BVPS-2licensetransferremains unchanged.The proformaincomestatement              providedin Enclosure     C continues to showthat FENGen's       expected  revenues   willcover   FENGen's    estimated annual operating  costsforthefive-year    period.In addition,    the $400millionFESsupport agreement   remainsin place. Lastly,the sufficiency       of the BVPS-2decommissioning trustfund remainsunaffected      withthe mostrecentresultsto be reportedin accordance with10 CFR50.75(f)      to the NRCby March31, 2017.
Sincethe December       15,2016submittal,    therehavebeenadditional       directorand executive  personnel   changesat FE and FES. Thedirectorsandexecutive             personnel for the aforementioned    two companies    are UnitedStatescitizens.
Thereare no regulatory     commitments    contained   in thisletter.lf thereareany questions,  or if additional information is required,  pleasecontactMr.ThomasA. Lentz, Manager FleetLicensing,        at 330-315-6810.
Enclosure   C to thislettercontainsconfidential     financialinformation.
Withhold   frompublicdisclosure     under10 CFR2.390and10 CFR9.17.
Uponremovalof Enclosure       C, this letteris uncontrolled.

CONFIDENTIAL    FINANCIAL    INFORMATION    TO BEWITHHELD       FROMPUBLIC DISCLOSURE     PURSUANT    TO 10CFR2.390AND1OCFR9.17 BeaverValleyPowerStation,UnitNo.2 L-17-085 Page4 I declareunderpenaltyof perjurythatthe foregoingis trueand correct.Executedon MarchfiL,2017.
Sincerely, fuelL. Belcher

==Enclosures:==

A. Non-Proprietary ExhibitG B. Affidavit C. ProprietaryExhibitG cc:            NRR(withoutEnclosure Director,                       C)
NRCRegionI Administrator   (withoutEnclosure C)
NRCResidentlnspector(withoutEnclosure     C)
NRRProjectManager(withoutEnclosure      C)
DirectorBRP/DEP(withoutEnclosure    C)
SiteBRP/DEPRepresentative    (withoutEnclosure  C)
EnclosureC to thislettercontainsconfidentialfinancialinformation.
Withhold frompublicdisclosure  under10CFR2.390and10 CFR9.17.
Uponremovalof Enclosure   C, thisletteris uncontrolled.

EnclosureA L-17-085 ExhibitG Non-Proprietary (Onepagefollows)

ExhibitG Page1 EXHIBITG (Non-Proprietary      Version)(r)
FirstEnergyNuclearGeneration,LLC Pro FormaIncomeStatements
($ in millions) 2017       2018 OperatingRevenues OperatingExpenses:
Fuel Purchased Power O&MExpenses GeneralTaxes Depreciation                  rtrltl TotalOperatingExpenses OperatingIncome OtherIncome(Expenses):
InvestmentIncome InterestExpense AFUDC(2)                      rrrltllltl Total Otherlncome             t1         I1          I]       t1       I1 (Expenses)
IncomeBeforeIncomeTaxes       tl         t1          I1       I1       I1 IncomeTaxes                   rr         rl          11       I]       II GAAP(3)Net Income             rlrltltltl Note:
(1) Information contained                                 proprietary.
withinthe brackets[ ] is considered (2)AFUDC= Allowance  for FundsUsedDuringConstruction (3) GAAP = GenerallyAcceptedAccountingPrinciples

Enclosure B L-17-085 Affidavit (Twopagesfollow)

10cFR 2.390 10cFR 9.17 AFFIDAVIT OF SAMUELL. BELCHER I, SamuelL. Belcher, Chainnan of the FirstEnergy Nuclear Operating Company (FENOC)
Board. Presidentof FENOC and Chief Nuclear Officer of FENOC statethat:
: l.      I am authorizedto executethis affidavit on behalf of FENOC and its affiliates.
: 2.      FENOC is providing information in support of its "Application for Order Consentingto Transfer of License and Approving Conforming License Amendments." The Proprietary Version of Exhibit G being provided in EnclosureC of this submittal containsfinancialpro forma statementsrelated to anticipatedrevenuesfrom salesof energy and capacity from Beaver Valley Power Station, Unit No. 2 (BVPS-2) and confidential information regarding anticipated assets,liabilities and capital structureat the time of transfer. The information soughtto be withheld in the Proprietary Version of Exhibit G is identified by being enclosedinside squffe brackets [ ]. The Proprietary Version of Exhibit G containsproprietary financial information that should be held in confidenceby the Nuclear Regulatory Commission (NRC) pursuantto the policy reflectedin 10 CFR 2.390(a)(a)and 10 CFR 9.17(a)@),because:
: a.      This information is and has beenheld in confidencebv FENOC and its affiliates.
: b.      This information is of a type that is held in confidence by FENOC and its affiliates, and there is a rational basis for doing so becausethe information contains sensitive financial competitive information concerning FENOC's affiliates' anticipated revenuesand operating expenses.
: c.      This information is being transmittedto the NRC in confidence.
: d.      This information is not available in public sourcesand could not be gatheredreadily from other publicly available information.
: e.      Public disclosure of this information would create substantialharm to the competitive position of FENOC by disclosing its internal financial pro forma statementsand the commercial terms of a unique transactionto other parties whose commercial interestsmay be adverseto thoseof FENOC.
: 3. Accordingly,FENOCrequeststhat the designated    documentsbe withheldfrom public pursuanttothepolicyreflectedin 10 CFR2.390(a)(a) disclosure                                                            and10CFR9.17(il().
FirstEnergyNuclearOperatingCompany SamuelL. Belcher Chairman of the Board, President,and Chief Nuclear Officer srArEop       lHr rt couNrYoF $Un " tT J Public, in and for the Stateand County above Subscribedand swor^nto 1ne,a Notary named, this /0 fl auyor /lo^e( zut.
My Commission                 Expires:
                                                          ."$ru+#to,                       TerriL.Hunsinger i <F-
                                                        -     &--Ja
                                                              - - r -
f -\ '1.1-( :
a-.E!d               SUmmitCOurny ReSident
                                                        ? t ffirfi#              * =" NotaryPublic,Stateof Ohio i                           I
:     ry:
                                                          "..'{lffF,:}:t s My
                                                              ^\1ry*&4.               MvCommision CommisionF:cirerriCi2C2l Lpire}}