View source for PY-CEI-NRR-1794, Application for Amend to License NPF-58,replacing Clei & Toed W/Newco as Licensee,Designating Newco as Owner of Pnpp & Making Other Administrative Changes to License

{{Adams
| number = ML20069H255
| issue date = 06/02/1994
| title = Application for Amend to License NPF-58,replacing Clei & Toed W/Newco as Licensee,Designating Newco as Owner of Pnpp & Making Other Administrative Changes to License
| author name = Stratman R
| author affiliation = CENTERIOR ENERGY
| addressee name = 
| addressee affiliation = NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
| docket = 05000440
| license number = 
| contact person = 
| document report number = PY-CEI-NRR-1794, NUDOCS 9406130043
| package number = ML20069H259
| document type = OPERATING LICENSES-APPLIATION TO AMEND-RENEW EXISTING, TEXT-LICENSE APPLICATIONS &amp; PERMITS
| page count = 55
| project = 
| stage = Request
}}

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{{#Wiki_filter:. - .      ..                          .     -                       -
crwrsmoa                                                                                                  :
ENERGY PERRY NUCLEAR POWER PLANT                      Mail Address:                                  Robert A.Stratman           ;
PO BOX 97                                      VICE PRESIDENT . NUCLEAR     4 10 CENTER ROAD                                  ERW, OWO M 81                                                             ,
PERRY, OHIO 44081                                                                                                         *
(216) 259-3737 June 2, 1994                                           i PY-CEI/IER-1794L U. S. Nuclear Regulatory Commission                                                                           '
Document Control Desk Vashington, D. C.               20555 Perry Nuclear Power Plant                             !'
Docket No. 50 440 License Amendment Application to Revise                .
the Facility Operating License to Reflect the Proposed Merging of                          .
Operating Companies 1
I Gentlemen:
* Enclosed is an application for an amend;ient to the Perry Nuclear Power Plant                                 t (PNPP) Unit Number 1 Operating Licen u Number NPF-58. The proposed changes                                   F reflect the proposed merger of the Toledo Edison Company into the Clevelan.1 Electric Illuminating Company.                    The Cleveland Electric Illuminating Company and             ;
the Toledo Edison Co:apany are operating companies of the Centerior Energy                                   l Corporation. The C'.eveland Electric Illuminating Company, the Toledo Edison                                 !
Company, and the Cer.terior Service Company are wholly-owned subsidiaries of the                              l Centerior Energy Corporation.                                                                                 ;
The company formed from the merger is intended to be renamed; however, the name                               !
of the combined operating company is yet to be determined. Therefore, the                                    ;
enclosure utilizes the nomenclature "NEWC0" as a temporary substitute for the                                ;
name of the combined operating company. The name of the combined operating                                   :
company will be provided later by supplemental letter.                                                       l; This license amendment application proposes that Operating License Number                                      ,
NPF-58 be amended to replace the Cleveland Electric Illuminating Company and                                   l the Toledo Edison Company with NEVC0 as a licensee, to des! *
* NEVC0 as an                                   r owner of PNPP, and to make other administrative changes te                             inse, as described in the enclosure. Centerior Service Company                          _o- .a 3 Jicensee              ,
and is not affected by these proposed changes.                                                                i I
i i
b        h Ol b Operotng Companies                                                                             }
Cleveland Electnc muminating roteco Emson 9406130043 94060'                                         {
PDR       ADOCK 05000440                                                  i P                     PDR                                                 ]

USNRC                                                       June 2, 1994 PY-CEI/NRR-1794L The proposed merger requires approval of other regulatory agencies in addition to the Nuclear Regulatory Commission (NRC). The NRC Project Manager for PNPP vill be kept informed of the progress made by the other regulatory agencies.
The NRC will be provided written notice proposing an effective date and a required implementation date for the amendment. The merger is planned to be completed by the end of 1994, so that NEVC0 can come into corporate existence         ;
on January 1, 1995. Accordingly, it is requested that the NRC approve this            I amendment by November 30, 1994, conditioning its effectiveness upon receipt of        t the other necessary regulatory approvals and upon consummation of the merger.
If you have questions or require additional information, please contact Mr. J. D. Kloosterman, Manager - Regulatory Affairs, at (216) 280-5833.
Very truly yours, f       f                      '
l
[
RAS:RMC:sc Enclosure and Attachments cc:     Regional Administrator, NRC Region III PNPP NRC Senior Resident Inspector PNPP NRC/NRR Project Manager J. R. Villiams, Chief of Staff, Ohio Emergency Management Agency, State of Ohio (NRC Liaison)
Utility Radiological Safety Board                                             r r
I r
f

  -                                                             Enclosure
.                                                               PY-CEI/NRR-1794L Page 1 of 12 APPLICATION FOR AMENDMENT TO FACILITY OPERATING LICENSE NUMBER NPF-58 PERRY NUCLEAR POWER PLANT UNIT NUMBER 1 Attached are the requested changes to the Perry Nuclear Power Plant, Unit Number 1 Facility Operating License Number NPF-58. Also included is the Safety Assessment and Significant Hazards Consideration and the Environmental Consideration.
The proposed changes (submitted under cover letter PY-CEI/NRR-1794L) concern:
Facility Operating License Number NPF-58, Paragraphs 1.A, l.E, 2, 2.A, 2.B, 2.C, 2.D, 2.E, 2.F, Attachment 1, Attachment 2, Appendix A Cover Sheet, Appendix B Cover Sheet, and Appendix C.

    .                                                                 Enclosure
  .                                                                   PY-CEI/NRR-1794L Page 2 of 12 The following information is provided to support issuance of the requested       ,
changes to Perry Nuclear Power Plant (PNPP), Unit Number 1, Facility Operating License Number NPF-58.
I. INTRODUCTION In March, 1994, the Boards of Directors of Centerior Energy Corporation, the Cleveland Electric Illuminating Company (CEI), and the Toledo Edison Company (TE) approved the filing of the necessary applications to merge the operating company subsidiaries, CEI and TE.      r TE vill be merged into CEI. The name of the combined operating company is yet to be determined. The nomenclature "NEVC0" is used herein as a temporary substitute for the name of the combined operating compar.y. The Agreement of Merger is provided for reference as Attachment 1.                                                           >
The Cleveland Electric Illuminating Company, the Toledo Edison Company, the Duquesne Light company, the Ohio Edison Company, the Pennsylvania Power Company (collectively the owners) and the Centerior Service Company (CSC) are the holders of Facility Operating      l License Number NPF-58 for PNPP. The operating license authorizes the       ;
owners to possess PNPP, and authorizes CEI and CSC as agents for the owners to use and operate PNPP in accordance with the conditions, limitations, and procedures set forth in the operating license. CEI       .
is the operator of PNPP and CSC presently has senior management responsibility for nuclear activities at PNPP. CSC is the existing        ,
service company subsidiary of Centerior Energy Corporation.
II. REQUESTED REGULATORY ACTION                                                ;
This application requests that the Nuclear Regulatory Commission (NRC) amend the PNPP Operating License NPF-58 to authorize:
(1) NEVCO, pursuant to Section 103 of the Atomic Energy Act of 1954, as amended (the Act), and 10 CFR Part 50 " Domestic           i Licensing of Production and Utilization Facilities," to possess, use, and operate the PNPP at the designated location in Lake County, Ohio, in accordance with the procedures and limitations set forth in this license; (2) Duquesne Light Company, Ohio Edison Company, Pennsylvania Power Company, and NEVC0 pursuant to the Act and 10 CFR Part 50, to possess the facility at the designated location         :
in Lake County, Ohio, in accordance with the procedures and limitations set forth in the operating license;                     ;
(3) NEVCO, pursuant to the Act and 10 CFR Part 70, to receive,           ;
possess, and use at any time special nuclear material as            l reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the Pinal Safety Analysis Report, as supplemented and amended; r

  ..                                                                Enclosure PY-CEI/NRR-1794L Page 3 of 12         ,
(4) NEVCO, pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, possess and use at any time any byproduct, source and special nuclear material as sealed neutron sources for reactor startup, sealed sources for reactor instrumentation and radiation monitoring equipment calibration and as fission detectors in amounts as required;                                                            i (5) NEVCO, pursuant to the Act and 10 CFR Parts 30, 40, and 70 to receive, possess and use in amounts as required any byproduct, source or special nuclear material without                ;
restriction to chemical or physical form, for sample                ,
analysis or instrument calibration or associated with radioactive apparatus or components; and (6) NEVCO, pursuant to the Act and 10 CFR Parts 30, 40, and 70,            ;
to possess, but not separate, such byptoduct and special nuclear materials as may be produced by the operation of            ;
the facility.                                                       ,
This application also requests that the NRC amend the PNPP Operating License to designate NEUC0 as an owner of PNPP, and make other administrative changes to the license. Each of these changes is described in detail in Attachment 2.                                       ;
As described in Attachment 2, the proposed changes have been reviewed pursuant to the standards provided in 10 CFR 50.92(c), and it has          :
been determined that the proposed changes do not involve a                 l significant hazards consideration.
s An Environmental Assessment has been prepared and is included as           ;
Attachment 3. As described in Attachment 3, the proposed license amendment has been reviewed against the criteria of 10 CFR 51.30 for an environmental assessment. The proposed amendment does not involve       ,
a significant hazards consideration, does not increase the types or        4 amounts of effluents that may be released offsite, and does not           ;
increase individual or cumulative occupational radiation exposures.
Accordingly, it has been found that the proposed license amendment, if approved by the Nuclear Regulatory Commission, vill have no            ,
significant impact on the environment and that no Environmental Impact Statement is required.                                             i III. GENERAL INFORMATION A. Name: As noted above, the name of the combined operating company from the merger is yet to be determined. The                 L nomenclature "NEWC0" is used herein as a temporary substitute for    j the name of the combined operating company.
C B. Address: 6200 Oak Tree Boulevard Independence, Ohio 44131 i
l f

  .                                                      Enclosure PY-CEI/NRR-1794L Page 4 of 12 C. Description of Business or Occupation                                 ,
NEWC0 vill be a wholly-owned subsidiary of the Centerior Energy Corporation. NEVC0 vill provide electrical service on a retail        '
and wholesale basis. Upon receipt of necessary regulatory approvals, NEVC0 and CSC, as licensees, will have exclusive responsibility and control over the physical construction, operation, and maintenance of the PNPP.
NEVC0 vill become similarly responsible for another licensed and operating nuclear plant, the Davis-Besse Nuclear Power Station (DBNPS); however, this action vill be dealt with in a separate        :
license amendment application.
D. Organization and Management of the Operating Company NEVC0 vill be a corporation to be organized and existing under the laws of the State of Ohio. CSC vill continue to provide senior management responsibility for nuclear activities at FNPP.
Centerior Energy Corporation, CSC, and NEVC0 are neither owned, controlled nor dominated by an alien, a foreign corporation nor a foreign government.
The prospective directors and principal officers of NEVC0 are citizens of the United States. Their names and addresses are as       ,
follows:
Directors Robert J. Farling chairman of the Board Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131 Hurray R. Edelman, President Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131 Fred J. Lange, Jr., Vice President Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131 Principal Officers Robert J. Farling Chief Executive Officer Centerior Energy Corporation                                .
6200 Oak Tree Boulevard Independence, Ohio 44131                                    !
I

i
     .                                                  Enclosure         '
   .                                                     PY-CEI/NRR-1794L Page 5 of 12 Hurray R. Edelman, President Centerior Energy Corporation                              ,
6200 Oak Tree Boulevard Independence, Ohio 44131                                  ,
Gary R. Leidich, Vice President and Chief Financial Officer Centerior Energy Corporation 6200 Oak Tree Boulevard                                   -
Independence, Ohio 44131 Fred J. Lange, Jr., Vice President Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131 Terrence G. Linnert, Vice President Centerior Energy Corporation 6200 Oak Tree Boulevard                                   }
Independence, Ohio 44131                                  ,
Paul G. Busby, Controller Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131                                  ,
Gary H. Hawkinson, Treasurer Centerior Energy Corporation                              ,
6200 Oak Tree Boulevard Independence, Ohio 44131 E. Lyle Pepin, Secretary Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131 Janis T. Percio, Assistant Secretary Centerior Energy Corporation                             ,
6200 Oak Tree Boulevard                                  :
Independence, Ohio 44131                                 ;
Barbara A. Frastaci, Assistant Treasurer                 i Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131                                  l Delores Eargrove, Assistant Treasurer Centerior Energy Corporation 6200 Oak Tree Boulevard Independence, Ohio 44131                                  l 1
The present PNPP nuclear organization consists of four departments staffed by CEI personnel: Nuclear Power Plant E
(including Operations), Nuclear Engineering, Nuclear Assurance, 1

Enclosure
.                                                          PY-CEI/NRR-1794L Page 6 of 12 and Nuclear Services. These four departments report to the CSC Vice President, Nuclear - Perry, who reports to the CSC Senior Vice President, Nuclear.      When the necessary regulatory approvals are obtained and the merger is consummated, the present PNPP organization vill be transferred intact from CEI to NEUCO, and vill continue to report to CSC, as shown in Attachment 4.
The reporting relationships vill remain unchanged, and the nuclear organization vill continue to have clear and direct lines of responsibility and authority.
E. Technical Qualifications The technical qualifications of NEVC0 to fulfill its responsibilities under the proposed amended Operating License are consistent with the present technical qualifications of CEI because the proposed merger vill involve no change in personnel responsibilities. Vhen the necessary regulatory approvals are obtained and the merger is consummated, the PNFP nuclear organization vill be transferred intact from CEI to NEVCO. The nuclear organization vill continue to report to CSC. Key personnel at PNPP vould remain the same under the change.
When the merger is consummated, NEVC0 and CSC vill continue to operate, manage, and maintain PNPP in accordance with the conditions and requirements established by the NRC, with the same regard for public and personal safety heretofore exemplified by CEI and CSC. The existing and continued organizational structure provides clear lines of authority and responsibility while ensuring that essential nuclear support functions provided by NEVC0 and CSC are dedicated to PNPP.
The effectiveness of the organization vill not be degraded by the merger. Plant-specific needs vill continue to be addressed.
Existing priorities and ongoing plant improvement projects vill be maintained.
In summary, the technical qualifications will remain equivalent to those currently existing.
F. Benefits of Proposed License Amendment In April, 1986, CEI and TE became affiliated through the creation of a parent holding company, Centerior Energy Corporation, and the subsequent mergers of CEI and TE into wholly-owned subsidiaries of Centerior Energy Corporation. Shortly after the consummatien of this affiliation, a systematic process for integration of the two companies was begun. This process included the establishment of CSC into which substantially all of the administrative and management functions of CEI and TE vere transferred.
Although significant cost savings have already been realized due to this affiliation, it is anticipated that additional incremental savings vill be obtained through the actual merger of
* Enclosure
.                                                           PY-CEI/NRR-1794L Page 7 of 12 the two operating utilities. Currently, it remains necessary to prepare two separate sets of audited financial statements on a yearly basis. Following the merger, only a single set of audited statements vill be required. Furthermore, separate rate cases and fuel cases vill no longer be necessary, and additional savings vill be realized in the areas of external financing, advertising, and marketing.
G. Financial Aspects CEI and TE are both Ohio corporations operating as public utilities providing electrical service on a retail and wholesale basis. The common stock of both utilities is wholly-owned by Centerior Energy Corporation, a public utility holding company.
Both utilities have preferred stock issued and outstanding, which is held publicly by individual and institutional shareholders.
At the time of the merger, all of the shares of common stock of TE, wholly-owned by Centerior Energy Corporation, would be converted into newly issued shares of common stock of CEI, and the outstanding preferred shares of TE vould also be exchanged for newly issued preferred shares of CEI. The CEI common and preferred stock would, in turn, be converted into shares of NEVCO. The CEI and TE generating, transmission, distribution and other facilities and assets, tangible and intangible, vill by operation of law be combined in the merger process. The general use of all such facilities vill remain unchanged after the merger. The facilities vill continue to be used for the provision of wholesale and retail electric service. The resulting corporation, NEWCO, would assume the contractual obligations of CEI and TE. Accordingly, the merger would not have any effect on any contract for the purchase, sale or interchange of electric energy.
CEI and TE are subject to the jurisdiction of the Public Utilities Commission of Ohio (PUCO), and are seeking that agency's approval of the merger. In addition, both utilities      are subject to the jurisdictional autnority of the Pennsylvania Public Utilities Commission (PPUC) by virtue of their undivided ownership interests in property located in the State of Pennsylvania. Accordingly, an application for approval of the merger is also being filed with that Commission. The companies        j vill also file with the U.S. Securities and Exchange Commission       l (SEC) a joint proxy statement with respect to the required meetings of their preferred stockholders, a registration statement with regard to the preferred shares to be issued by the resulting company, as well as any reports required under the securities laws and regulation. In accordance with the requirements set forth at 10 CFR 50.91(b)(1), notice vill also be served on the State of Ohio by virtue of transmittal of this application, which includes the jus'(fication for reaching a conclusion that the license amence m. would not involve a significant hazards consideration,      aally, the companies are submitting a filing with the U. S. ederal Energy Regulatory Commission (FERC), establishing t'r t the merger vill be             I

  .                                                         Enclosure PY-CEI/NRR-1794L Page 8 of 12 consistent with the public interest and that there are no antitrust nor other considerations that are adversely impacted by the proposed action. Copies of the filings with the various regulatory agencies vill be provided to the NRC staff upon request.
NEWC0 vill be an " electric utility" as that term is defined by 10 CFR 50.2. Therefore, under 10 CFR 50.33(f), a full financial qualifications review of this application to amend the Operating License is not necessary. Moreover, the merging of CEI and TE, both of which were subjected to financial qualification review during initial licensing of PNPP and DBNPS, respectively, vill not affect the financial qualification as previously determined.
The proposed business combination would not alter the status quo with respect to the ability to obtain the funds necessary to cover costs for the operation, maintenance, repair, decontamination, and decommissioning of PNPP. Just as CEI and TE currently have joint responsibility for assuring the source of funds necessary to support the operation of the PNPP, their combined responsibility under the merger vould remain the same, as vould that of Centerior Energy Company, the parent company of both.
Financial responsibilities previously held by CEI and TE, including required insurance and the applicable indemnity arrangements, will be assumed by NEVCO.
The merger vill not affect the corporate financial resources currently available in support of PNPP operations.
H. Antitrust Conditions This merger is subject to separate reviews of antitrust considerations by the FERC, the PUCO, the FPUC, and the SEC.
Based on the reviews of the FERC and the SEC, the proposed merger may also potentially be subject to review by the U. S. Department of Justice and the Federal Trade Commission.
The PNPP Operating License contains conditions relating to antitrust issues applicable to the current owners and licensees of the facility (see Operating License NPF-58, Conditions 2.C(3)a, 2.C(3)b, and Appendix C). NEVC0 would assume the responsibilities of CEI and TE under those antitrust conditions.
Those conditions would not otherwise change and would continue to apply to PNPP.
There is currently pending an appeal before the U. S. Court of Appeals for the District of Columbia Circuit. That action seeks reversal of decisions taken by the NRC and the Atomic Safety and Licensing Board pertaining to the antitrust conditions in the referenced license. The amended license vould be subject to the final resolution of that matter, just as it is currently.

  .                                                               Enclosure PY-CEI/MRR-1794L Page 9 of 12 Given that the existing antitrust conditions incorporated into the PNPP Operating License would not be substantively altered by this amendment, and would otherwise be effective against the nev           ;
owner of the facility, there is no "significant change" in the licensed activities. Accordingly, the NRC need not conduct an extensive antitrust review of the application, given the limited authority of the NRC to reviev license amendments as they pertain to antitrust considerations under Section 105c of the Atomic Energy Act.     (See, Houston Lighting & Power Co.     (South Texas Project, Units Nos.1 and 2), CLI-77-13, 5 NRC 1303 (1977) and Florida Power & Light Co.     (St. Lucie Plant, Unit 1, and Turkey Point Plant, Units 3 and 4), ALAB-428, 6 NRC 221 (1977)).
Moreover, the NRC's deferral to the Federal and State agencies having primary jurisdiction over antitrust proceedings is entirely consistent with Regulatory Guide 9.3, Regulatory Staff Position Statement on Antitrust Matters. That document states, in part, as follows:
In general, reliance vould be placed on the exercise of
[FERC] and State agency jurisdiction regarding the specific terms and conditions of the sale of power, rates for transmission services, and such other matters as may be within the scope of their jurisdiction.                     l t
These issues vill be among those addressed by the other agencies from which approval of or consent to the merger is being sought, and the NRC's reliance on these proceedings is reasonable and proper. In conclusion, the proposed merger of CEI and TE vould not result in a significant change in the competitive environment in which PNPP operates.
i I. Restricted Data This application does not contain any Restricted Data or other classified defense information, and it is not expected that any such information vill become involved in the licensed activities.
However, in the event that such information does become involved,           ;
NEVC0 agrees that it vill appropriately safeguard such information and it vill not permit any individual to have access to Restricted Data until the Civil Service Commission shall have made an investigation and report to the NRC on the character,               ;
associations, and loyalty of such individual, and the NRC shall             :
have determined that permitting such person to have access to               I Restricted Data vill not endanger the common defense and security           [
of the United States.
IV. SPECIFIC INFORMATION REGARDING ADDITIONAL ISSUES A. Emergency Planning                                                          l Upon consummation of the merger, NEVC0 vill assume authority and responsibility for functions necessary to fulfill the emergency planning requirements specified in 10 CFR 50.47 and Appendix E to
* 10 CFR 50. No substantive changes vill be made to the existing i
i

  .                                                          Enclosure PY-CEI/NRR-1794L Page 10 of 12 PNPP Emergency Plan presently implemented by CEI.      In addition.
there vill be no significant changes to the existing Emergency Planning organization as a result of the merger activity.
With respect to existing agreements for support from offsite organizations and agencies, necessary actions vill be taken to       i ensure that such agreements vill remain in force continuously        ,
during and following the transition in responsibility from CEI to NEVCO.
Because the effectiveness of the Emergency Plan vill not be decreased, specific Emergency Plan and procedure changes will be submitted to the NRC vithin 30 days after the changes are made, in accordance with 10 CFR 50.54(q) and 10 CFR 50 Appendix E, Section V, as appropriate.
B. Offsite Power Appendix A to 10 CFR 50, General Design Criterion 17, requires that there be a reliable source of off-site power to PNPP. The proposed merger involves no change in the design, operation, maintenance, or testing of the off-site power system. Upon           !
consummation of the merger, NEVC0 vill assume and fulfill the        ,
responsi^oilities for control, operation, maintenance, repair, and other activities with respect to the transmission lines and the switchyard, such that adequate physically independent sources of off-site power vill continue to be provided.
C. Exclusion Area                                                       ;
The limits of the PNPP Exclusion Area are described in the PNPP      i Updated Safety Analysis Report (USAR). Ownership of this area presently resides in CEI (31.11% ownership), Duquesne Light Company (13.74% ownership), Ohio Edison Company (30% ownership),     ,
Pennsylvania Power Company (5.24% ownership), and TE (19.91%
ownership) as tenants in common. CEI presently has authority to exercise complete control over the Exclusion Area, to the extent required by 10 CFR 100, including the authority to control           -
ingress and egress and to order evacuation if necessary. Upon consummation of the merger, ownership of this area vill reside in    ;
NEVCO, and NEVC0 vill have the authority to exercise' complete control over the Exclusion Area.                                     ;
t D. Security The proposed license amendment vill not impact compliance with       !
the physical security requirements of 10 CFR 73 as set forth in     !
the PNPP Nuclear Security Plan, PNPP Nuclear Security Contingency'  !
Plan, and PNPP Nuclear Security Training and Qualification Plan. l Upon consummation of the merger, NEVC0 vili assume responsibility    ,
for implementation of all aspects of the present security program.

Enclosure
.                                                            PY-CEI/NRR-1794L Page 11 of 12 Vith respect to existing agreements for support from offsite organizations and agencies, necessary actions vill be taken to ensure that such agreements will remain in force continuously during and following the transition in responsibility from CEI to NEVCO.
Because the effectiveness of the security plans vill not be decreased, specific security plan and procedure changes vill be submitted to the NRC within two months after the changes are made, in accordance with 10 CFR 50.54(p)(2).
E. Quality Assurance Program Upon consummation of the merger, NEVC0 vill assume responsibility for present functions associated with the PNPP Quality Assurance (0A) program. The function and structure of the 0A organization vill not be affected as a result of the merger activity. The QA organization vill continue to have the same direct access to the    i Chairman, President, and Chief Executive Officer of the Centerior Energy Corporation on matters related to quality.
Changes to the QA program description included in the USAR vill not reduce the program commitments, and vill be handled in accordance with 10 CFR 50.54(a)(3).
F. Training                                                            ,
Upon consummation of the merger, NEWC0 vill assume responsibility for implementation of the operator requalification program requirements of 10 CFR 50.54 and related sections. Changes to the program vill not decrease the scope of the approved operator requalification program without the specific authorization of the NRC in accordance with 10 CFR 50.54(1-1).                           .
The merger is not expected to affect maintenance of the Institute of Nuclear Power Operation's accreditation for licensed and non-licensed training.                                              ,
G. Engineering Support Currently, engineering support for PNPP-is provided by a dedicated engineering organization. Upon consummation of the merger, the engineering functions which are currently part of CEI would transfer intact to NEWCO. Accordingly, there vould be no changes in engineering support provided, and no changes in the interfaces between organizations responsible for engineering support for operations and maintenance of PNPP as a result of the merger activity. Thus, there vould be no degradation of engineering support function and its integration with operations and maintenance.

Enclosure
.                                                                   PY-CEI/NRR -1794L  ,
Page 12 of 12     ,
V. CORRESPONDENCE After the implementation date of this requested license amendment,           l all NRC correspondence related to Docket No. 50-440, including any NRC response to previously submitted license amendment requests or pending licensing action, should be directed to NEVCO, and should           :
refer to NEVC0 in lieu of CEI. All licensee correspondence related to the PNPP vill be transmitted by NEVCO. NEVC0 vill notify the NRC in writing of any exceptions to this policy.
VI. EFFECTIVE DATE As indicated above, the proposed merger requires approval of other regulatory agencies in addition to tl.e Nuclear Regulatory Commission (NRC). The NRC Project Manager for PNPP will be kept informed of the progress of the other regulatory agencies. The NRC vill be provided vritten notice proposing an effective date and a required                   ,
implementation date for the amendment. The merger is planned to be completed by the end of 1994, so that NEVC0 can come into corporate         i existence on January 1, 1995. Accordingly, it is requested that the NRC approve this amendment by November 30, 1994, conditioning its           ;
effectiveness upon receipt of the other necessary regulatory                ;
approvals and upon consummation of the merger.
VII. ACCEPTANCE OF AUTHORITY Attachment 5 provides an affidavit that NEVC0 vill accept the operating license responsibilities and the CEI and TE share of              i ownership for PNPP as a result of the merger of CEI and TE.
ATTACHMENTS
: 1. Agreement cf Merger                                                    l
: 2. Safety Assessment and Significant Hazards Consideration                .
: 3. Environmental Assessment                                               [
: 4. Proposed Organization
: 5. Acceptance of Authority                                                !
t l
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  .                                                                Attachment 1     ,
PY-CEI/NRR-1794L Page 2 of 26 AGREEMENT OF MERGER By and Between THE CLEVELAND ELECTRIC ILLUMINATING COMPANY and THE TOLEDO EDISON COMPANY Dated as of April 12,1994 4
D01:100160. DOCS.CEN31012l COVER,AND,T4F4.

i l
Attachment 1 .
PY-CEI/NRR-1794L Page 3 of 26                   i TABLE OF CONTENTS Paae      i 1
ARTICLE I                   TH E M ERG ER . . . . . . . . . . . . . . . . . . . . . . . . . . .        1 Section 1.1             Th e M e rg e r . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.2             Effective Time of the Merger . . . . . . . . . . . . . . . .               2 Section 1.3             Amended Articles of incorporation ............                             2 Section 1.4             Regulations           ............................                         2        ,
ARTICLE 11                  CONVERSION OF SHARES . . . . . . . . . . . . . . . . . .                   2 Section 2.1             Effect of Merger on CEI Shares . . . . . . . . . . . . . . .               2        ,
Section 2.2             Conversion of TE Shares in the Merger .........                            3         i Section 2.3             Surviving Corporation to Make Certificates Available ............................                                   5 Section 2.4             Dividends .............................                                    6        ,
Section 2.5             Closing of TE Transfer Books . . . . . . . . . . . . . . . .               6        ;
Section 2.6             Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . .          7 ARTICLE ll!                 THE CLOSING              ..........................                        8 Section 3.1             Clo sin g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8        -
ARTICLE IV                  ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . .                    8 i
Section 4.1             Joint Proxy Statement and Registration Statement ...........................                                   8 Section 4.2             Approvals and Consents . . . . . . . . . . . . . . . . . . .              11        ,
Section 4.3             Approval of TE Preferred Stockholders; Approval                                     i of CEI Preferred Stockholders . . . . . . . . . . . . . . .             11 Section 4.4              Public Announcements ....................                                12 i
Section 4.5              Employee Benefits and Related Matters; Certain Employee Agreements . . . . . . . . . . . . . .                 12 Section 4.6             Expenses..............................                                   12        :
ARTICLE V                    C O N D ITI O N S . . . . . . . . . . . . . . . . . . . . . . . . . . . 13        :
Section 5.1             Conditions to Each Party's Obligation to                                            ;
Effect the Merger . . . . . .. . . . . . . . . . . . . . . . . .        13       ,
Section 5.2             Conditions to Obligation of TE to                                                  !
Effect the Merger . . . . . . . . . . . . . . . . . . . . . . .         14        ,
Section 5.3             Conditions to Obligations of CEI to                                                j Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . -       15       4 ARTICLE VI                   TERMINATION, AMENDMENT AND WA'VER                              .....      16 Section 6.1             Termin a tio n . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 6.2            . Effect of Termination . . . . . . . . . . . . . . . . . . . . . .        17        j Section 6.3             Amendme nt . . . . . . . . . . . . . . . . . . . . . . . . . . . .        17        i Section 6.4             Waive r . . . . . .. . . . . . . . . . . . . . . . . . . ......           18 ARTICLE Vil                 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . .                18 18 Section 7.1            Non-Survival of Agreements . . . . . . . . . . . . . . . . .
Section 7.2            Bro ke rs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 7.3            N o tic es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18        ;
001 : LOO 160. DOCS.CCN310121COVEH_AND_T-OF-C.

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'                                                                                     Attachment 1        -
PY-CEI/NRR-1794L Page 4 of 26 Pace Section 7.4           Miscellaneous       ..........................                            19 Section 7.5           Interpretation . . . . . . . . . . . . .       .............              20 Section 7.6           Counterparts; Effect ......................                               20 Section 7.7           Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . .       20 Appendix i -- Glossary of Defined Terms Exhibit A -- Form of Certificate of Merger Exhibit B - Amended Articles of incorporation of the Surviving Corporation D01:(001GO. DOCS.CEN31012l COVER,AND_T-OF C.

Attachment 1 PY-CEI/NRR-1794L Page 5 of 26 AGREEMENT OF MERGER AGREEMENT OF MERGER, dated as of April 12,1994, (this " Agreement"), by and between The Cleveland Electric illuminating Company, an Ohio corporation
("CEl"), and The Toledo Edison Company, an Ohio corporation ("TE"). CEI and TE are each wholly owned subsidiaries of Centerior Energy Corporation, an Ohio corporation
(" CEC").
i BEClIALS The parties desire that TE be merged with and into CEI upon the terms and conditions contained herein. The boards of directors of each of CEl, TE and CEC deem the merger advisable and in the best interests of each of CEl, TE and CEC, the boards of directors of each of CEl, TE and CEC have adopted resolutions approving this Agreement and the transactions contemplated hereby, the board of directors of TE has directed that this Agreement be submitted for consideration at a meeting of the preferred shareholders of TE, and the board of directors of CEI has directed that the Amended Articles of incorporation of Surviving Corporation, as set forth in Exhibit B hereto, be submitted for consideration at a meeting of the preferred shareholders of CEl.
Unless the context shall otherwise require, capitalized terms used herein shall have the meanings assigned thereto in Appendix I hereto.
In consideration of the mutual premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I THE MERGER Section 1.1 The Mercer. Upon the terms and subject to the conditions of this Agreement, at the Effective Time, TE shall be merged with and into CEI (the D01 :100160. DOCS.CEN31012] AGREE MENT _OF, MERGER.

.                                                                    Attachment 1 PY-CEI/NRR-1794L Page 6 of 26
  " Merger"). The separate existence and corporate organization of TE shall thereupon cease and CEI and TE shall thereupon be a single corporation. CEI shall be the surviving corporation in the Merger (the " Surviving Corporation") and shall continue its existence under the provisions of the Ohio General Corporation Law (the "OGCL").
Section 1.2 Effective Time of the Mercer. On the Closing Date (as defined in Section 3.1 hereof), a certificate of merger substantially in the form of Exhibit A (the
   " Certificate of Merger") shall be executed by CEI and TE and shall be filed with the Secretary of State of the State of Ohio. The Merger shall become effective at such time as the Certificate of Merger is filed with the Secretary of State of the State of Ohio, such time being herein called the " Effective Time."
Section 1.3 Amended Articles of Incorporation. The Amended Articles of incorporation of CEI as in effect immediately prior to the Effective Time shall be replaced by the proposed A~ mended Articles of incorporation of the Surviving Corporation, as set forth in Exhibit B hereto, from and after the Effective Time until amended as provided by law.
Section 1.4 Reaulations. Regulations of CEI as in effect immediately prior to the Effective Time shall be and remain the Regulations of the Surviving Corporation from and after the Effective Time until amended as provided by law.
ARTICLE 11 CONVERSION OF SHARES Section 2.1 Effect of Meraer on CEI Shares. At the Effective Time, each share of CEI Common Stock without par value (the "CEl Common Stock"), issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding as one share of common stock, without par value (the " Surviving Corporation Common Stock"), of the Surviving Corporation.
001: lool 60. DOCS.CrN310121AGRC(MrNT_Of MrRGER.                                          !
I

,                                                                    Attachment 1 PY-CEI/NER-1794L Page 7 of 26 At the Effective Time, each share of CEI Serial Preferred Stock without par value (the "CEI Preferred Stock") issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding as one share of preferred stock without par value (the " Surviving Corporation Preferred Stock") of the Surviving Corporation, with the same express terms as were applicable to each such share prior to the Effective Time.
Section 2.2 Conversion of TE Shares in the Meraer. At the Effective Time, by virtue of the Merger and without any action on the part of any holder of any share of capital stock of TE:
(a)      each share of Common Stock, $5.00 par value (the "TE Common Stock") of TE, issued and outstanding shall be converted into one one-hundredth of one share (.01) of Surviving Corporation Common Stock; (b)      each share of Cumulative Preferred Stock with par value of one hundred dollars ($100) per share (the "TE $100 Preferred Stock") of TE, of each of the respective series indicated below, issued and outstanding shall be converted into one share of Surviving Corporation Preferred Stock of the respective series indicated below (series references to the series of Surviving Corporation Preferred Stock refer to the series set forth in Exhibit B hereto):
(i)       4-1/4% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $4.25 Series U; (ii)      4.56% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $4.56 Series V; (iii)     4.25 % Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $4.25 Series W:
(iv)      8.32% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $8.32 Series X;
                                                                                                ~
D01:tOO10ADOCS CEN310121 AGREEMENT _OF_ MERGER.

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#                                                                     Attachment 1                                       ,
PY-CEI/NRR-1794L Page 8 of 26 (v)      7.76% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $7.76 Series Y:
(vi)     7.80% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $7.80 Series Z:                                                                    2 (vii)    10% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $10.00 Series AA; (viii)   9-3/8% Cumulative Preferred Stock ($100 par value) series into Serial Preferred Stock, $9.375 Series 88; (c)     each share of Cumulative Preferred Stock of the par value of                                   ,
twenty-five dollars ($25) per share (the "TE $25 Preferred Stock") of TE, of each of the respective series indicated below, issued and outstanding shall be converted into                                    !
one-fourth of a share af Surviving Corporation Preferred Stock of the respective series indicated below (series references to the series of Surviving Corporation Preferred Stock refer to the series set forth in Exhibit B hereto):
(i)      8.84% Cumulative Preferred Stock ($25 par value) series into Serial Preferred Stock, $8.84 Series CC; (ii)     $2.365 Cumulative Preferred Stock ($25 par value) series 1
I into Serial Preferred Stock, $9.46 Series DD; (iii)    Adjustable Rate Preferred Stock, Series A ($25 par value) into Serial Preferred Stock, Adjustable Rate Series EE;                                                         .
l (iv)     Adjustable Rate Preferred Stock, Series B ($25 par value)                            j into Serial Preferred Stock, Adjustable Rate Series FF; and (v)       $2.81 Cumulative Preferred Stock ($25 par value) series into Serial Preferred Stock, $11.24 Series GG.
(d)     The TE $100 Preferred Stock and the TE $25 Preferred Stock are sometimes collectively referred to herein as the "TE Preferred Stock."
2 001.100160. DOCS.CEN310121AGREEWINT OF, MERGER.

.                                                                      Attachment 1 PY-CEI/NRR-1794L Page 9 of 26 Section 2.3 fiorvivina Corporation to Make Certificates Available. (a) As soon as practicable after the Effective Time, each holder of shares of TE Preferred Stock converted into shares of Surviving Corporation Preferred Stock pursuant to Section 2.2(b) or 2.2(c), upon surrender to the Exchange Agent of one or more certificates for such shares of TE Preferred Stock will be entitled to receive a certificate representing that number of shares of Surviving Corporation Preferred Stock of the series as set forth in Section 2.2(b) or 2.2(c) to be issued in respect of the aggregate number of such shares of TE Preferred Stock previously represented by the stock certificates surrendered. Notwithstanding any other provision hereof, no fractional shares of Surviving Corporation Preferred Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued, and no right to receive cash in lieu thereof shall entitle the holder thereof to any voting or other rights of a holder of fractional share interests. If a stockholder would otherwise be entitled to a fractional share, such stockholder shall be entitled, after the later of the Effective Time and the surrenderof such stockholder's Certificate or Certificates which represent such shares of TE Preferred Stock, to receive from the Surviving Corporation an amount in cash in lieu of such fractional share, based on the fair market value thereof as of the Effective Timo. The Surviving Corporation will make available to the Exchange Agent, as required, cash necessary for this purpose. Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto shall be liable to a holder of shares of TE Preferred Stock for any Surviving Corporation Preferred Stock or dividends thereon delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
(b)       As soon as practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate or Certificates that immediately prior to the Effective Time represented outstanding shares of TE Preferred 1
001: toot 60. DOCS.CEN31017] AGREEMENT _OF MERGER

''                                                                     Attachment 1              ,
PY-CEI/NRR-1794L Page 10 of 26 Stock (the " Certificates") (i) a form letter of transmittal (which shall specify that delivery shall be effective, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and (ii) instructions for use in effecting the surrender of the Certificates.
(c)      The cash paid and shares of Surviving Corporation Preferred Stock issued upon the surrender of Certificates in accordance with the terms hereof shall be deemed to have been paid and issued in full satisfaction of all rights pertaining to such shares of TE Preferred Stock.
(d)      Any Surviving Corporation Preferred Stock certificates delivered or made available to the Exchange Agent pursuant to this Section 2.3 and not exchanged for Certificates within one year after the Effective Time pursuant to this           ,
Section 2.3 shall be returned by the Exchange Agent to the Surviving Corporation which shall thereafter act as Exchange Agent subject to the rights of holders of unsurrendered Certificates underthis Article 11. Notwithstanding the foregoing, neither CEl, TE, the Surviving Corporation, the Exchange Agent nor any other party hereto shall be liable to a holder of TE Preferred Stock for any Surviving Corporation Preferred Stock, or dividends or distributions thereon, delivered to a public official pursuant to any applicable abandoned property, escheat, or similar law.
Section 2.4 Dividends. After the Effective Time and pending the surrender and exchange of shares of TE Preferred Stock for shares of Surviving Corporation Preferred Stock pursuant to Section 2.3, each Certificate or Certificates shall be
   - deemed for all corporate purposes, including the payment of dividends, to evidence the number of whole shares of Surviving Corporation Preferred Stock into which such I
shares of TE Preferred Stock shall have been converted by the Merger.
l l
See, tion 2.5. Closina of TE Transfer Books. At the Effective Time the Preferred Stock transfer books of TE shall be closed and no transfer of TE Preferred Stock shall D01:100160. DOCS.CEN310121 AGREEMENT,OF, MERGER.

i l
* Attachment 1 PY-CEI/NRR-1794L          1 Page 11 of 26 thereafter be made. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be cancelled and exchanged for certificates i
representing whole shares of Surviving Corporation Preferred Stock and cash as provided in this Article 11.
Section 2.6 Dissentina Shares. Notwithstanding anything to the contrary contained in this Agreement, in the event appraisal rights are available to holders of TE Preferred Stock or to holders of CEI Preferred Stock pursuant to the OGCL, ar1y Shares held by a person who objects to the proposal to adopt this Agreement (in the case of TE) or who objects to the proposal to adopt the Amended Articles of Incorporation of the Surviving Corporation (in the case of CEI), whose Shares either were not entitled to vote or were not voted in favor of the proposal to adopt this Agreement (in the case of TE) or the proposal to adopt the Amended Articles of incorporation of the Surviving Corporation (in the case of CEI) and who complies with all of the provisions of the OGCL concerning the rights of such person to dissent from such proposals and to require appraisal of such person's Shares (" Dissenting Shares")
shall not be converted pursuant to Section 2.2, or remain outstanding pursuant to Section 2.1, but shall become the right to receive such consideration as may be determined to be due to the holder of such Dissenting Shares pursuant to the OGCL, including, if applicable, any costs determined to be payable by the Surviving Corporation to the holders of Dissenting Shares in accordance with the OGCL; orovided, however, that each Dissenting Share held by a person at the Effective Time who shall, after the Effective Time, withdraw the demand for appraisal or lose the right of appraisal, in either case pursuant to the OGCL, shall be deemed to be
                                                        /
converted (or to remain outstanding, as the case may be) as of the Effective Time, as set forth in Section 2.2 or Section 2.1, for whole shares of the same class and series
~
and cash for any fractional share, without any interest therec.i.
001:100160. DOCS.CEN31012] AGREEMENT,OF_MmGER.

Attachment 1            -
PY-CEI/NRR-1794L Page 12 of 26 ARTICLE lil THE CLOSING Section 3.1 Closing. The closing (the " Closing") of the Merger shalltake place at the offices of CEC,6200 Oak Tree Boulevard, Independence, Ohio 44131 at 10:00 A.M., local time, on the second business day immediately following the date on which the last of the conditions set forth in Article V hereof is fulfilled or waived, or at such other time and date and place as TE, CEC and CEI shall mutually agree (the " Closing Date").
ARTICLE IV ADDITIONAL AGREEMENTS Section 4.1 Joint Proxy Statement and Reaistration Statement. (a) CEI and TE will prepare and file with the SEC as soon as reasonably practicable after the date          t hereof (i) a Registration Statement on Form S-4 to be filed under the Securities Act by CEI in connection with the Merger for purposes of registering the shares of Surviving Corporation Preferred Stock to be issued in the Merger pursuant to Article 11 hereof (the " Registration Statement") and (ii) a joint proxy statement to be filed under the Exchange Act by CEI and TE and to be distributed by CEI and TE, respectively, in connection with the CEI Stockholders' Approval and the TE Stockholders' Approval (the " Joint Proxy Statement" and, together with the t
Registration Statement, the " Joint Proxy Statement and Registration Statement"). CEI i
and TE shall use reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable after such filing. CEI and TE shall also take such action as may be reasonably required to cause the shares of Surviving Corporation Preferred Stock issuable pursuant to the Merger to be registered or to obtain an exemption from registration under applicable state " blue sky" or securities laws; provided, however, that neither CEI nor TE shall be required to register 001:100160. DOCS.CEN31012] AGREEMENT,OF MERGER.

i l
Attachment 1                  !
PY-CEI/NRR-1794L              l Page 13 of 26                 I or qualify as a foreign corporation or to take other action which would subject it to service of process in any jurisdiction where it is not presently so subject. CEI will furnish to TE and TE shall furnish to CEI allinformation concerning itself as each such other party or its counsel may reasonably request and which is required or customary           j for inclusion in the Joint Proxy Statement and Registration Statement. CEI shall use         ;
reasonable efforts to cause the shares of Surviving Corporation Preferred Stock is~ suable in the Merger upon conversion of TE Preferred Stock to be listed on the New       ,
York Stock Exchange, with respect to those series of Surviving Corporation Preferred Stock issued upon conversion of a series of TE Preferred Stock that was listed on a          ;
stock exchange.                                                                              ;
(b)       CEI covenants to TE that the Joint Proxy Statement and Registration Statement (i) will comply in all material respects with the applicable         ;
provisions of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder and (ii) will not at the respective times such documents are filed with the SEC, and,in the case of the Joint Proxy Statement or any amendments thereof or supplements thereto, at the time of the mailing of the Joint Proxy Statement and any amendments thereof or supplements thereto, and at the time of .
t the- meetings of stockholders of CEI and TE to be held in connection with the transactions contemplated by this Agreement, and, in the case of the Registration           I Statement and any amendment thereof or any supplement thereto, at all times after -         ;
it becomes effective under the Securities Act and until the Effective Time, contain any .   !
untrue statement of a material fact or omit to state any material fact required to be -
stated therein or necessary in order to make the statements therein, in light of the       l circurnstances under which they were made, not misleading, or necessary to correct l
any statement in any earlier filing with the SEC of such Joint Proxy Statement and Registration Statement or any amendment thereof or any supplement thereto or any
[
D01 :jo0160.00CS.CEN31012 l AGREEMENT _OF, MERGER.                                         q
* Attachment 1                  -
PY-CEI/NRR-1794L Page 14 of 26 earlier communication (including the Joint Proxy Statement and Registration Statement) to stockholders of CEI or TE with respect to the transactions contemplated by this Agreement; provided, that no covenant or agreement is made by CEI with respect to information supplied by TE for inclusion in the Joint Proxy Statement and Registration Statement.                                                                         t (c)      TE covenants to CEI that the Joint Proxy Statement and Registration Statement (i) will comply in all material respects with the applicabic provisions of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder and (ii) will not at the respective times such documents are filed with the SEC, and,in the case of the Joint Proxy Statement or any amendments              ;
thereof or supplements thereto, at the time of the mailing of the Joint Proxy Statement and any amendments thereof or supplements thereto, and at the time of the meetings of stockholders of CEI and TE to be held in connection with the transactions contemplated by this Agreement, and, in the case of the Registration Statement and any amendment thereof or any supplement thereto, at all times after 1
it becomes effective under the Securities Act and until the Effective Time, contain any          !
untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or necessary to correct any statement in any earlier filing with the SEC of such Joint Proxy Statement and Registration Statement or any amendment thereof or any supplement thereto or any earlier communication (including the Joint Proxy Statement and Registration Statement) to stockholders of CEI orTE with respect to the transactions contemplated by this Agreement; provided, that no covenant or agreement is made by TE with
                                                                                                   )
respect to information supplied by CEI for inclusion in the Joint Proxy Statement and Registration Statement.
001 dOO160.OOCS.CEN31012) AGREEMENT,OF, MERGER.

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* Attachment 1 PY-CEI/NRR-1794L Page 15 of 26 Section 4.2 A_pfrovals and Consents. CEI and TE each shall cooperate with each other and use their reasonable efforts to promptly prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to use commercially reasonable efforts to obtain all necessary permits, consents, approvals and authorizations of all third parties and governmental bodies necessary or advisable to consummate the transactions contemplated by this Agreement, including, without limitation, the CEI Required Statutory Approvals and the TE Required Statutory Approvals.
Section 4.3 Anoroval of TE Preferred Stockholders: Acoroval of CEI Preferred Stockholders.          (a) TE shall as soon as reasonably practicable (i) take all steps necessary duly to call, give notice of, convene and hold a special meeting of holders of TE Preferred Stock (the "TE Special Meeting") (A) for the purpose of adopting this Agreement (the "TE Stockholders' Approval") and (B) for such other purposes as may be necessary or desirable, (ii) distribute to holders of TE Preferred Stock the Joint Proxy Statement in accordance with applicable Federal and state law and with its Amended Articles of Incorporation and Code of Regulations, (iii) recommend to holders of TE Preferred Stock the adoption of this Agreement and such other matters as may be submitted to such stockholders in connection with this Agreement and (iv) cooperate and consult with CEI with respect to each of the foregoing matters.
(b)      CEI shall as soon as reasonably practicable (i) take all steps necessary to call, give notice of, convene and hold a special meeting of holders of CEI Preferred Stock (the "CEI Special Meeting") (A) for the purpose of adopting the Amended Articles of Incorporation of the Surviving Corporation in the form set forth in Exhibit B hereto (the "CEI Stockholders' Approval"), and (B) for such other purposes as may be necessary or desirable, (ii) distribute to holders of CEI Preferred Stock the
                                                                     ~
Joint Proxy Statement in accordance with applicable Federal and state law and its D01:100160 DOCS.CEN310121 AGREEMENT _OF MERGER.

4
;                                                                    Attachment 1               l PY-CEI/NRR-1794L Page 16 of 26 Amended Articles of Incorporation and Regulations,(iii) recommend to holders of CEI           ,
Preferred Stock the adoption of the Amended Articles of incorporation of the Surviving Corporation and such other matters as may be submitted to such stockholders in connection with this Agreement, (iv) cooperate and consult with TE with respect to           ,
each of the foregoing matters and (v) in the event such Amended Articles of incorporation are adopted by the requisite vote of holders of CEI Preferred Stock, file such Amended Articles of incorporation in order to permit it to consummate the transactions contemplated hereby.
Section 4.4         Public Announcements. Subject to each party's disclosure obligations imposed by law, CEI and TE will cooperate with each other and with CEC in the development and distribution of all news releases and other public information disclosures with respect to this Agreement or any of the transactions contemplated hereby and shall not issue any public announcement or statement prior to consultation with the other party and with CEC.
Section 4.5         Employee Benefits and Related Matters: Certain Emolovee Aareements. CEI hereby unconditionally agrees to honor, without modification, offset or counterclaim, all contracts, agreements, collective bargaining agreements and commitments of TE authorized by TE prior to the Effective Time which apply to any current or former employee or current or former director of TE; orovided, however, that this undertaking is not intended to prevent the Surviving Corporation from enforcing such contracts, agreements, collective bargaining agreements and commitments in accordance with their terms.
Section 4.6 Excenses. All costs and expensesincurred in connection with this Agreement and the transactions contemplated hereby shall be shared equally by CEI end TE.
001:100160. DOCS.CEN310121 AGREEMENT _OF,MERGEll I

Attachment 1 PY-CEI/NRR-1794L Page 17 of 26 ARTICLE V CONDITIONS Section 5.1 Conditions to Each Party's Obliaation to Effect the Meraer. The respective obligations of each party to effect the Merger shall be subject to the following conditions, except, to the extent permitted by applicable law, as such conditions may be waived in writing pursuant to Section 6.4 by the joint action of the parties hereto:
(a)      this Agreement having been adopted by the requisite vote of the holders of the TE Preferred Stock required under the OGCL and TE's Amended Articles of incorporation; (b)      the Amended Articles of incorporation of the Surviving Corporation in the form set forth in Exhibit B hereto (the " Articles Amendment") having been adopted by the requisite vote of the holders of shares of CEI Preferred Stock under the OGCL and CEl's Amended Articles of Incorporation; (c)      a Certificate of Amended Articles of incorporation of the Surviving Corporation, effectuating the Articles Amendment under the applicable requirements of the OG.CL, having been filed with the Secretary of State of the State of Ohio; (d)      no preliminary or permanent injunction or other order by any Federal or state court preventing consummation of the Merger having been issued and continuing in effect, and the Merger and the other transactions contemplated hereby not being prohibited under any applicable Federal or state law or regulation; (e)      the Registration Statement having become effective in accordance with the provisions of the Securities Act, and no stop order suspending such
                  ~
effectiveness having been issued and remaining in effect; and                        ,
001: lool 60 DOCS.CEN310121 AGREEMENT _OF_ MERGER.

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PY-CEI/NRR-1794L Page 18 of 26 (f)      the shares of Surviving Corporation Preferred Stock issuable pursuant to Ar'.tle ll hereof in the Merger having been approved for listing on the New York Stock Exchange to the extent contemplated by the terms of this Agreement.
The parties mutually recognize and acknowledge that at the time of execution of this Agreement, this Agreement and alltransactions contemplated hereby, including approval of the Articles Amendment, have been adopted by CEC as the sole holder of CEI Common Stock and TE Common Stock.
Section 5.2 Conditions to Oblication of TE to Effect the Meraer. The obligation of TE to effect the Merger shall be further subject to the fulfillment at or prior to the Effective Time of the following conditions, except, to the extent permitted by applicable law, as may be waived by TE in writing pursuant to Section 6.4:
(a)       CEI having performed in all material respects its agreements and covenants contained in or contemplated by this Agreement required to be performed at or prior to the Effective Time; (b)       all actions required to be taken by, or on the part of, CEI to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby having been duly and validly taken by the board of directors and stockholders of CEl, and TE having redeived certified copies of the resolutions evidencing such authorizations;          j (c)      the CEI Required Statutory Approvals having been obtained at or    I prior to the Effective Time and all filings, registrations, applications, designations and declarations required prior to the Effective Time in connection with the consummation of the Merger and such transactions having been made or effected at or prior to the Effective Time:
001 :100160. DOCS.CCN310121 AGREEMENT _OF_ MERGER.

[                                                                      Attachment 1 PY-CEI/NRR-1794L            l Page 19 of 26 (d)     the - CEI Required Statutory Approvals and the TE Required Statutory Approvals having become Final Orders (as defined below) unless such           .
I I
Final Order shall impose any term or condition on the Surviving Corporation which shall cause a material adverse change to the business, operations or              )
prospects of the Surviving Corporation. A " Final Order" means action by the            j i
relevant regulatory authority which has not been reversed, stayed, enjoined, set i
aside, annulled or suspended, with respect to which any waiting period                  j prescribed by law before the transactions contemplated hereby may be consummated has expired, and as to which all conditions to the consummation i
of such transactions prescribed by law, regulation or order have been satisfied.
Section 5.3 Conditions to Oblications of CEI to Effect the Meraer. The                  i obligation of CEI to effect the Merger shall be further subject to the fulfillment at or         i i
prior to the Effective Time of the following conditions, except, to the extent permitted         {
l by applicable law, as may be waived by CEI in writing pursuant to Section 6.4:                   }
e              !
(a)     TE having performed in all material respects its agreements and        j i
covenants contained in or contemplated by this Agreement required to be performed at or prior to the Effective Time;                                            i (b)     all action required to be taken by, or on the part of, TE to authorize the execution, delivery and performance of this Agreement and the                       [
consummation of the transactions contemplated hereby having been duly and               {
i validly taken by the board of directors and stockholders of TE, and CEI having          !
received certified copies of the resolutions evidencing such authorizations;            l t
(c)      the TE Required Statutory Approvals having been obtained at or prior to the Effective Time, and all filings, registrations, applications,              j i
designations and declarations required prior to the Effective Time in connection        ;
i 001:100160. DOCS.CEN31012 AGREEMENT _OF,MLRGER.

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                                  .-,     mm. .m___., _
4-                                                                             Attachment 1              ,
PY-CEI/NRR-1794L Page 20 of 26 with the consummation of the Merger and such transactions having been made or effected at or prior to the Effective Time:
(d)       the CEI Required Statutory Approvals and the TE Required Statutory Approvals having become Final Orders unless such Final Order shall impose any term or condition on the Surviving Corporation which shall cause a material adverse change to the business, operations or prospects of the Surviving Corporation.
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER _
Section 6.1 Termination. This Agreement may be terminated at any time prior to the Closing Date, whether before or after adoption of this Agreement by the holders of TE Preferred Stock and adoption of the Articles Arnendment by the holders of CEI Preferred Stock contemplated by this Agreement:
(a)       by mutual written consent of the boards of directors of CEI and TE:or (b)        by CEl, by written notice to TE, if:
(i)          there shall have been any material breach of any covenant or agreement of TE hereunder and such breach shall not have been remedied within ten days after receipt by.TE of notice in writing from CEl, specifying the nature of such breach and requesting that it be remedied; or (ii)        the board of directors of TE shall withdraw or modify in any manner adverse to CEI its approval or recommendation of this Agreement or the Merger; or                                          .
(c)         by TE, by written notice to CEl, if:               ,
001 :100160. DOCS.CIN31012i AGREEMENT,OF, MERGER.
* Attachment 1 PY-CEI/NRR-1794L                ;
Page 21 of 26 (i)       there shall have been any material breach of any covenant or agreement of CEI hereunder and such breach shall not have been                    [
remedied within ten days after receipt by CEI of notice in writing from TE, specifying the nature of such breach and requesting that it be                   ;
remedied; or (ii)      the board of directors of CEI shall withdraw or modify in I
any manner adverse to TE its approval or recommendation of this Agreement or the Merger.                                                             [
Section 6.2           Effect of Termination.       In the event of termination of this       l Agreement by either CEI or TE, as provided in Section 6.1, there shall be no liability                 ,
on the part of either CEI or TE or their respective officers or directors hereunder, except that Section 4.6 shall survive the termination.                                                 :
Section 6.3 Amendmcht. This Agreement may be amended by the parties 4
hereto, at any time before or after adoption hereof by the holders of TE Preferred                     .
Stock and adoption of the Articles Amendment by the holders of CEI Preferred Stock, but after such approvals, no such amendment shall (i) alter or change the amount or                    l kind of shares, cash or rights or any of the proceedings of the exchange and/or                        l conversion, (ii) alter or change any of the terms and conditions of this Agreement if                  j 1
any of the alterations or changes, alone or in the aggregate, would materially                         l adversely affect the holders of any class or series of Shares, or (iii) alter or change any term of the Amended Articles of incorporation of the Surviving Corporation, except for alterations or changes that could otherwise be adopted by the directors of the                      l Surviving Corporation, without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
j D01:100160. DOCS.CEN31012] AGREE MENT,OF, MERGER.                                                       !
j

i I
Attachment 1                  ,
PY-cEI/NRR-1794L Page 22 of 26 Section 6.4 Waiver. At any time prior to the Effective Time, one party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto and (b) waive compliance with any of the agreements or                 l l
conditions contained herein. Any agreement on the part of a party hereto to any such             l 1
extension or waiver shall be valid if set forth in an instrument in writing signed on            l behalf of such party.
ARTICLE Vil GENERAL PROVISIONS                                           !
Section 7.1 Non-Survival of Aareements. All agreements in this Agreement shall not survbe the Merger, except as otherwise provided in this Agreement and except for the agreements contained in Article 11 and Section 4.5 hereof.
Section 7.2 Brokers. CEI represents and warrants that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of CEl. TE represents and warrants that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of TE.
Section 7.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if (i) delivered personally, or (ii) sent by reputable overnight courier service, or (iii) telecopied (which is confirme 1), or (iv) five days after being mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
                                                               .                                     1 l
      ~ . .,,~ wee cru,,n, m corrunn nr urne,rn
* Attachment 1 PY-CEI/NRR-1794L Page 23 of 26 (a)      If to CEl, to:
6200 Oak Tree Boulevard independence, Ohio 44131 Attention:      E. Lyle Pepin Telephone: (216) 447-2300 Telecopy: (216) 447-3240 With a copy to:
Kevin P. Murphy, Senior Counsel 6200 Oak Tree Boulevard independence, Ohio 44131 Telephone: (216) 447-3251 Telecopy: (216) 447-2592 (b)      If to TE, to:
6200 Oak Tree Boulevard Independence, Ohio 44131 Attention:     E. Lyle Pepin Telephone: (216) 447-2300 Telecopy: (216) 447-3240 With a copy to:
Bruce T. Rosenbaum, Counsel 6200 Oak Tree Boulevard independence, Ohio 44131 Telephone: (216) 447-3207 Telecopy: (216) 447-2592 Section 7.4 Miscellaneous. This Agreement (including the documents and         l instruments referred to herein) (a) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the          i parties, or any of them with respect to the subject matter hereof; (b) shall not be assigned by operation of law or otherwise; and (c) shall be governed by and construed in accordance with the laws of the State of Ohio (without giving effect to its rules or principles of conflicts of law).
001:100160. DOCS.CEN3 40121 AGREEMENT,OF, MERGER.
* Attachment 1            ,
PY-CEI/NRR-1794L Page 24 of 26 Section 7.5 Internretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words " include," " includes" or " including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."
Section 7.6 Counterparts: Effect. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.
Section 7.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and, nothing in this Agreement, express or         ,
implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, CEI and TE have caused this Agreement to be signed by their respective officers thereunto duty authorized as of the date first written above.
THE CLEVELAND ELECTRIC ILLUMINATING         l COMPANY By:         ((M~
Name: D LYLE Wptu                      ;
i

==Title:==
secretary THE TOLEDO EDISON COMPANY                   ,
By:                A Name: ' D DLfPEFIT4                    !

==Title:==
seemtary 001:100160 DOCS.CEN31012] AGREEMENT,.0F_ MERGER.
* Attachment 1 PY-CEI/NRR-1794L Page 25 of 26 APPENDIX l GLOSSARY OF DEFINED TERMS
  " Agreement" means the Agreement of Merger between CEI and TE.
  " Articles Amendment" has the meaning set forth in Section 5.1(b) of the Agreement.
  " CEC" means Centerior Energy Corporation, an Ohio corporation.
  "CEl" means The Cleveland Electric illuminating Company, an Ohio corporation.
  "CEI Common Stock" means the common stock without par value of CEl.
  "CEI Preferred Stock" means the Serial Preferred Stock without par value of CEl.
  "CEI Required Statutory Approvals" means any required approvals of the Merger and other transactions contemplated by the Agreement by the Federal Energy Regulatory Commission, the U. S. Nuclear Regulatory Commission, The Public Utilities Commission of Ohio and the Pennsylvania Public Utilities Commission.
  "CEI Special Meeting" has the meaning set forth in Section 4.3(b) of the Agreement.
  "CEI Stockholders' Approval" has the meaning set forth in Section 4.3(b) of the Agreement.
   " Certificate" has the meaning set forth in Section 2.3(b) of the Agreement.
   " Certificate of Merger" shall mean a certificate of merger substantially in the form of Exhibit A to the Agreement.
   " Closing" has the meaning set forth in Section 3.1 of the Agreement.
   " Closing Date" has the meaning set forth in Section 3.1 of the Agreement.
   " Dissenting Shares" has the meaning set forth in Section 2.6 of the Agreement.
   " Effective Time" has the meaning set forth in Section 1.2 of the Agreement.
   " Exchange Agent" shall mean the person or persons authorized and designated by the Surviving Corporation to perform the function of exchange agent as contemplated by the Agreement.
    " Final Order" has the meaning set forth in Section 5.2(d) of the Agreement.

k
?
Attachment 1              , :
PY-CEI/IER-1794L Page 26 of 26
  " Joint Proxy Statement" has the meaning set forth in Section 4.1(a) of the Agreement.
  " Joint Proxy Statement and Registration Statement" has the meaning set forth in Section 4.1(a) of the Agreement.
  " Merger" means the merger of TE into CEl.
  "OGCL" means the Ohio General Corporation Law.
  " Registration Statement" has the meaning set forth in Section 4.1(a) of the Agreement.
  "SEC" means the Securities Exchange Commission of the United States of America.
  " Shares" means collectively the TE Preferred Stock and the CEI Preferred Stock.
  " Surviving Corporation" has the meaning set forth in Section 1.1 of the Agreement.
  " Surviving Corporation Common Stock" means the common stock without par value of the Surviving Corporation.
   " Surviving Corporation Preferred Stock" means the Serial Preferred Stock without par value of the Surviving Corporation.
   "TE" means The Toledo Edison Company, an Ohio corporation.
   "TE $100 Preferred Stock" means the cumulative preferred stock ($100 par value) of TE.
   "TE $25 Preferred Stock" means the cumulative preferred stock ($25 par value) of TE.
   "TE Preferred Stock" means the cumulative preferred stock ($100 par value) and the cumulative preferred stock ($25 par value) of TE.
   "TE Required Statutory Approvals" means any required approvals of the Merger and        l the other transactions contemplated by the Agreement by the Federal Energy              i Regulatory Commission, the U.S. Nuclear Regulatory Commission, the Public Utilities     l Commission of Ohio and the Pennsylvania Public Utilities Commission.                    1 i
    "TE Special Meeting" has the meaning set forth in Section 4.3(a) of the Agreement. f l
    "TE Stockholders' Approval" has the meaning set forth in Section 4.3(a) of the Agreement.
2-2001:IOO160. DOCS.CEN31012tGLOSSARY_OF_00f tNED_ TERMS.

    -*                                                                                                   Attachment 2 PY-CEI/NRR-1794L Page 1 of 32 SAFETY ASSESSMENT AND SIGNIFICANT HAZARDS CONSIDERATION AND MARKED-UP OPERATING LICENSE PAGES I
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  -.                                                                   Attechment 2 PY-CEI/NRR-1794L Page 2 of 32 SAFETY AESESSMENT AND SIGNIFICANT HAZARDS CONSIDERATION TITLE Revision of Facility Operating License Number NPF-58 to Reflect the Proposed Merger of the Cleveland Electric Illuminating Company and the           '
Toledo Edison Company.
DESCRIPTION On March 22, 1994, the Board of Directors of the Centerior Energy Corporation, the Cleveland Electric Illuminating (CEI) Company, and the Toledo Edison (TE) Company adopted a plan to merge the operating company subsidiaries, CEI and TE, into a single operating entity. Centerior Service Company (CSC) is an existing service company subsidiary of Centerior Energy Corporation and vill remain as such. The reason for the merger is to maximize the operating efficiencies for these two affiliated companies.
The name of the operating entity to be formed from the merger of CEI and TE is yet to be determined. Therefore, the nomenclature "NEVC0" is used herein as e, temporary substitute for the name of the combined operating         ,
company. The final name is an administrative matter and does not affect the conclusions of this Safety Assessment and Significant Hazards Consideration. The final name vill be provided to the Nuclear Regulatory Commission (NRC) under separate letter prior to NRC approval of this License Amendment Request.
The purpose of the proposed changes is to modify the Ferry Nuclear Power Plant (PNPP) Operating License NPF-58 to replace "CEI" and "TE" with "NEUC0" as a licensee authorized to possess, use, and operate PNPP, to designate NEVC0 as an owner of PNPP, and to make other associated administrative changes to the license. Each of these changes is described in further detail below. Centerior Service company will remain as a designated licensee and is not affected by those proposed changes.
The proposed amendment would modify paragraph 1.A of Operating License NPF-58 to name NEUCO, in conjunction with Centerior Service Company, as the a      agents for the other owners of PNPP, and as a licensee for PNPP in place of       ,
CEI and TE. The footnote to paragraph 1.A would be revised to read as follows:
                 "The NEVC0 and Centerior Service Company (both of which are wholly-owned subsidiaries of Centerior Energy Corporation) are authorized to act as agents for Duquesne Light Company, Ohio Edison Company and Pennsylvania Power Company, and have exclusive responsibility and control over the physical construction, operation and maintenance of the facility. Centerior Service Company was added as a licensee by Amendment No. 36. The NEUC0 was formed from a merger of the Cleveland Electric Illuminating Company and the Toledo Edison Company. Accordingly,                      ,
Amendment No. (to be added by the NRC) added the NEVC0 as                l l
4 l
l

-                                                                 Attachment 2 PY-CEI/NRR-1794L Page 3 of 32 a licensee and deleted the Cleveland Electric Illuminating Company and the Toledo Edison Company."                                 ,
Paragraph 2 would be revised to name NEVC0 as a licensee for PNPP in place                      i of CEI and TE.
Paragraph 2.A vould be revised to name NEVC0 as an owner of PNPP in place of CEI and TE.
Paragraph 2.B(2) would be revised to delete TE os an owner of PNPP.
Paragraphs 1.E, 2.B(1), 2.B(1) Footnote, 2.B(3), 2.B(A), 2.B(5), 2.B(6),
2.C(1), 2.C(2), 2.C(3)(a), 2.C(3)(b), 2.C(6), 2.C(6)(c , 2.C(9), 2.D, 2.E, and 2.F would be revised to replace references to CEI (and TE, as applicable) with NEUCO.
The first sentence of paragraph 2.C(2) would be revised to read:
               "The Technical Specification contained in Appendix A and the Environmental Protection Plan contained in Appendix B, as revised by Commission approved Amendments, are                                 '
hereby incorporated into this license."
j This change vould eliminate the specific amendment number and the administrative burden to revise this paragraph each time a new amendment is approved by the NRC.
Paragraph 2.C(4), " Post-Fuel Loading Initial Test Program (Section 14, SSER
    #3)," pertains to the initial test program for PNPP. This paragraph would be deleted as it has been completed as documented in USAR Appendix IB.
Paragraph 2.C(5), " Inservice Inspection Program (Section 6.6.3, SSER #7),"
pertains to submitting the Initial Inservice Inspection Program to the NRC                     ,
staff within six (6) months after exceeding 5% rated thermal power. This condition was satisfied by {{letter dated|date=March 31, 1987|text=letter dated March 31, 1987}} (PY-CEI/NRR-0614L)                       '
and would be deleted by this revision to the Operating License.
Paragraph 2.C(7) and Attachment 1, " Detailed Control Room Design Review                       I (Section 18, SSER #10)," pertains to completing the implementation of the Detailed Control Room Design Review and correcting the human engineering deficiencies identified in Attachment 1.      The human engineering deficiencies to be completed before the start of the 100-hour warranty run were completed as documented by {{letter dated|date=October 12, 1987|text=letter dated October 12, 1987}} (PY-CEI/NRR-0728L). The human engineering deficiencies and final sound surveys detailed in Attachment 1 to be completed before startup following the first refueling outage were documented as complete by {{letter dated|date=July 11, 1989|text=letter dated July 11, 1989}} (PY-CEI/NRR-1031L). The augmented verification of human engineering discrepancy corrections implemented after full-power licensing and correction of any problems identified during the augmented verification was to be completed before startup from the second refueling outage. This portion of the license condition was documented as complete by {{letter dated|date=November 30, 1990|text=letter dated November 30, 1990}} (PY-CEI/NRR-1260L). The license condition and Attachment vould be deleted by this revision to the Operating License.
I l
l
______________J

l l
-                                                                    Attachment 2          :
PY-CEI/NRR-1794L      l Page 4 of 32          ;
Attachment 2 vould be modified to replace the reference to CEI with NEVCO.             '
Appendix A and Appendix B Cover Sheets vould be revised to replace the                 l reference to Cleveland Electric Illuminating Company with NEVCO.
Appendix C would be modified to replace the references to Cleveland Electric Illuminating Company and Toledo Edison Company with NEWCO.
Centerior Service Company would be added to maintain consistency with 2.C(3)(b) of the License.
EFFECTS ON SAFETY Since NEWC0 would be the result of the merger of two of the existing                   !
licensees (CEI and TE), these changes are administrative. Under this restructuring, the PNPP organization would continue to report to the Centerior Service Company, and NEVC0 and Centerior Service Company would remain subsidiaries of Centerior Energy Corporation. There vould be no material change in the ownership of PNPP or entitlement to electric power.
The proposed changes do not involve physical changes to the facility. The proposed changes vould not involve significant changes in the manner in which the plant is operated, or the technical qualifications of the personnel who operate the plant. There vould be no significant material change in the responsibility for the conduct of operational activities including security, quality assurance, emergency planning, and training.
The proposed changes are administrative and it is therefore concluded they would have no adverse effect on safety.
SIGNIFICANT HAZARDS CONSIDERATION                                                      I The standards used to arrive at a determination that a request for                     I amendment involves no significant hazards considerations are included in              l the Commission's Regulations, 10 CFR 50.92, which state that the operation            i of the facility in accordance with the proposed amendment would not (1) involve a significant increase in the probability or consequences of an accident previously evaluated, (2) create the possibility of a new or different kind of accident from any previously evaluated, or (3) involve a significant reduction in a margin of safety.
: 1.         The proposed changes do not involve a significant increase in the probability or consequences of an accident previously evaluated.
1 The proposed changes to the Operating License are administrative           l and have no effect on any plant systems. All Limiting Conditions for Operation, Limiting Safety Systems Settings and Safety Limits specified in the Technical Specifications remain unchanged. This           i change meets one of the examples of a change not likely to involve a significant hazards consideration in that it is a purely administrative change (48 FR 14864).
l

  .                                                          Attachment 2 PY-CEI/NRR-1794L j
Page 5 of 32
: 2. The proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
The proposed changes to the Operating License are administrative and have no effect on any plant systems. All Limiting Conditions for Operation, Limiting Safety Systems Settings and Safety Limits specified in the Technical Specifications remain unchanged. This change meets one of the examples of a change not likely to involve i
a significant hazards consideration in that it is a purely administrative change (48 FR 14864).
: 3. The proposed changes do not involve a significant reduction in the margin of safety.
1 The proposed changes to the Operating License are administrative and have no effect on any plant systems. All Limiting Conditions for Operation, Limiting Safety Systems Settings and Safety Limits specified in the Technical Specifications remain unchanged. This change meets one of the examples of a change not likely to involve a significant hazards consideration in that it is purely an administrative change (48 FR 14864).
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o sANcg UN!T E D sT ATES                                    *
[ k,                           NUCLE AR HEGUL ATORY COMMISSION
                                             ""W                                          Page 6 of 32 db / j
     % "*****/                             N E.W CO CLEVL[A:e REC!n:C ILMSATI:~ CG:'PA"Y CENTERIOR SERVICE COMPANY                                              l   [
r DUQUESNE LIGHT COMPANY OHIO EDISON COMPANY PENNSYLVANIA POWER COMPANY 1
                                       - TOLEDO E0! SON COliT'ANY ?
l DOCKET NO. 50-440                                                     ,
PERRY NUCLEAR POWER PLANT, UNIT NO. 1                                             ,
FACILITY OPERATING LICENSE                                                  ,
License No. NPF-58 i
: 1. The Nuclear Regulatory Comission (the Comission) has found,that:                   ,
f4EWcow                   '
A. The application for license filed by the Cicvcicr.d'Eic'ctric
-                  I;bT.inctir6; Comp =y+ (CEICC) and Centerior Service Company acting                       l on their own behalf a1Las agents for the Duquesne Light Company, Ohio Edison Company",densylvania Power Company =d the Tc!cdc Edf sem                          i
                   -Ccap=y (licensees) complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Comis-                           ,
sion's regulations set forth in 10 CFR Chapter I, and all required notifications to other agencies or bodies have been duly made;                                ,
B. Construction of the Perry Nuclear Power Plant, Unit No.1 (the facility) has been substantially completed in conformity with Construction Pemit No. CPPR-148 and the application, as amended, the provisions of the Act, and the regulations of the Comission; C. The facility will operate in confomity with the application, as amended, the provisions of the Act, and the regulations of the Com-mission, (except as exempted from compliance in Section 2.0 below);
D. There is reasonable assurance: (1) that the activities authorized by -
this operating license can be conducted without endangering the health and safety of the public, and (ii) that such activities will be conducted in compliance with the Comission's regulations set forth in 10 CFR                           i Chapter I (except as exempted from compliance in Section 2.D below);
        ~*C          Electric Illuminating Company and Centerior Service Com                          i of     .
I which are who              subsidiaries of Centerior Ene                     ion)are authorized to act as agen          orJusuesne Li                ny, Ohio Edison Company, 04di on Company, and have exclusive Pennsylvania     Power responsibility and c    Company      andtrol  over   the physical (construct 4on operation and maintena          , ic facility. Centerior Service Company was added-e licensee A yT uendment No. 36.
Amendment No. 36 k l usert (he d Me)

Attachment 2 PY-CEI/NRR-1794L Page 7 of 32     'l I
Insert (Paragraph 1.A footnote)
The NEVC0 and Centerior Service Company (both of which are wholly-owned subsidiaries of Centerior Energy Corporation) are authorized to act  as agents for Duquesne Light Company, Ohio Edison Company and Pennsylvania Power Company, and have exclusive responsibility and control over the physical construction, operation and maintenance of the facility.
Centerior Service Company was added as a licensee by Amendment No. 36. The UEVC0 vas formed from a merger of the Cleveland Electric Illuminating Company and the Toledo Edison Company. Accordingly, Amendment No. (to be added by the NRC) added the NEUC0 as a licensee and deleted the Cleveland Electric Illuminating Company and the Toledo Edison Company.
l h

Attachment 2 PY-CEI/NRR-1794L
_p_                            Page 8 of 32 OEk)
E. The C-hvehmi-Hec +eie-44h4ndim Company is technically qualified to engage in the activities authorized by this license in accordance               )
with the Commission's regulations set forth in 10 CFR Chapter I; F. The licensees have satisfied the applicable provisions of 10 CFR Part 140 " Financial Protection Requirements and Indemnity Agreements,"
of the Commission's regulations; G. The issuance of this license will not be inimical to the common defense and security or to the health cod safety of the public; H. After weighing the environmental, economic, technical and other bene-fits of the facility against environmental and other costs and con-sidering 'available alternatives, the issuance of this Facility Oper-ating License flo, f4PF-58, subject to the conditions for protection of the environment set forth in 'the Environmental Protection Plan attached as Appendix B, is in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied; and I. The receipt, possession, and use of source, byproduct and special nuclear material as authorized by this license will be"in accordance with the Commission's regulations in 10 CFR Parts 30, 40 and 70.
: 2. Based on the foregoing findings regarding this facility, the Partial-Initial Decisions issued December 2,1983 and September 3,1985 by the Atomic Safety and Licensing Board in regard to this facility (affirmed by ALAB-841 dated July 25,1986) and pursuant to approval by the fiuclear Regula-tory Comission at a meeting on tiovember 7,1986, Facility Operating License fio. fiPF-58, which supersedes the license for fuel loading and low NEWM R wer testing, License fio.14PF-45, issued on fiarch 18, 1986, is hereby issued to thellevcicad-Electric IlhMnaths Company, Centerior Service 4 Company,DuquesneLightCompany,OhioEdisonCompany,dennsylvaniaPower W Company cad Tcicdc Edison Company (the licensees) to read as follows:
A. The license applies to the Perry tiuclear Power Plant, Unit tio.1, a boiling water nuclear reactor and associated equipment (the facility),
N.EWCO- owned by the'Cicyckad Electric "h"'hatic Cc-sanv. Docunc:no I icht Company,OhioEdisonCompany,[PennsylvaniaPowerCompany-and16 ~ *
            -Tcicdc Edison Company. The facility is located on the shore of Lake Erie in Lake County, Ohio, approximately 35 miles northeast of Cleve-land, Ohio and is described in the licensees' Final Safety Analysis Report, as supplemented and amended, and in the licensees' Environ-mental Report, as supplemented and amended.
B. Subject to the conditions and requirements incorporated herein, the Comission hereby-licens,es:         .
NEWCO+
(1) The Clevchnd T:cctric Ilkminctt; Comp:ny (CEICO)* pursuant          .       1
   -               to Section 103 of the Act and 10 CFR Part 50, to possess, use
* and operate the facility at the designated location in Lake                 ,
County, Ohio, in accordance with the procedures and limitations set forth in this license; OThe 6 nuclear organization reports to Centerior Service Company.                          l MNeo          -
Amendment tio. 36

L Attachment 2       l PY-CEIn4RR-1794L   L Page 9 of 32 i
ud                                      I i
(2) Duquesne Light Company, Ohio Edisen Company,aPennsylvania Power Company
          < d 5'.du Edi m
                               " p?ny, to pcssess the f acility at the designoted               [
          'ocation in Lake County, Ohio, in accordance with the procedures and limitations set f orth in this license;                                               [
C utWCo                                                                                 I (3) (-HEO, pursuant to the Act and 10 CFR Part 70, to receive, possess and use at any time special nuclear material as reactor fuel, in accordance               :
with the limitations for storace and amounts required for reactor                     !
operation, as described in the Final Safety Analysis Report, as                       !
suppleraented and amended;                                                            l DEWCo                                                                                 i (4) tHEO, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to receive, possess, and use at any time any byproduct, source and special nuclear                 ,
material such as sealed neutron sources for reactor startup, sealed                   '
sources for reactor instrumentation and radiation monitoring equipment                ,
calibration, and as fission detectors in amounts as required;                         .
9EWCo (5) 6HEO, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to receive,                   l t
possess and use in amounts as required any byproduct, source or special nuclear material without restriction as to chemical or physical form, for            ;
sarrple analysis or instrument calibration or associated with radioactive            ,
l apparatus or components; and NEGeo                                                                                '
(6) G4C4, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to possess, but not separate, such byproduct and special nuclear materials as may be             t produced by the operation of the facility.
(7)(a)       Ohio Edison Compary is authorized to transfer any portion of its 30.0% ownership share in PNPP Unit 1 and a proportionate                   i share of its interest in the PHPP common facilities to certain                 ;
equity investors identified in its submission of January 23, 1987, l
as supplemented on March 3, 1987, and at the same time to lease j
back from such purchasers such interest sold in the PNPP Unit 1                 l facility. The term of the lease is for approximately 29-1/2 years subject to a right of renewal. Such sale and leaseback transactions are subject to the representations and conditions (ContinuedonPage3a)
C. This license shall be deemed to contain and is subject to the conditions
* specified in the Commission's regulations set forth in 10 CFR Chapter I and is subject to all applicable provisions of the Act and to the rules,            '
i regulations, and orders of the Comission now or hereafter in effect; and is subject to the additional conditions specified or incorporated below:
l (1) Maximum Power Level                                       ''
pCo CCC is authorized to operate the facility at reactor core power levels not in excess of 3579 megawatts thermal (100% power) in accordance with the conditions specified herein.
Naewimpr:f No,    p

l.
Attachment 2.              l PY-CEY/NRR-1794L           ;
Page 10 of 32 l
                                        - 3o-                                        1 l
i set forth in the above mentinned application of January 73,19PJ,                     i as supplemented on March 3,1987, as well as the 'etter of                            !
           *he Director of the Office of Nuclear Reactor Regulation dated March 16, 1987, consenting to such transactions. Specifically,                       j a lessor and anyene else who may acquire an interest under these                    l transactions are prohibited from exercising directly or                             i indirectly any control over the licenses of PNPP, Unit 1. For                        i purposes of this condition the limitations in 10 C.F.R. 50.81, as                    i now in effect and as may be subsequently amended, are fully                          }
applicable to the lessor and any successor in interest to that                       l lessor as long as the license for PNPP Unit I remains in effect; these financial transactions shall have no effect en the license                     j for the Perry Nuclear facility throughout the term of the license.
(b) Further, the licensees are also required to notify the NRC in                         ,
writing prior to any change in: (i) the terms or condttions of any                   l lease agreements executed as part of these transactions; (ii) the                    l PNPP Operating Agreement, (iii) the existir9 property insurance                      ;
coverage for PNPP, Unit 1, and (iv) any action by a lessor or others                 j that may have an adverse effect cn the safe operation of .the facility.              l 1
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                                                                                                 )
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Amendment No. 2-

Attachment 2 PY-CEI/NRR-1794L Page 11 of 32                  ,
_a_                                       ,-
                                                                                                        ^
M        '
(2) Technical Specifications                                         % Commissiw Ameen 5 The Technical Specifications contained in Appendix A and the) Environ-mental Protection Plan contained in Appendix B, as revised (thr@
Anendment-No. 36 are hereby incorporated into this license. C cvclana Tk, DEt4Co Electric Illumineting Ca::,pany shall operate the facility in accordance with the Technical Specifications and the Environmental Protection Plan.
(3) Antitrust Conditions                                                                    ,
NEWto
: a. Cicyclogil.lc;&ric Illtminating Comparrf, Duquesne Light Company,        {     '
M        "
Chio Edison Company,iPennsylvania Power Company and the Tc1cdc
        .          N          -Cdbcn CcT;any shall comply with the . antitrust conditions delineated in Appendix C to this license; Appendix C is hereby incorporated into this license.
: b. Centerior Service Company (CSC) shall comply with the antitrust conditions delineated in Appendix C to this license as if named                 '
-                MEwcodherein.TCEIC0 =is responsible and accountable for the actions of CSC to the extent that CSC's actions contravene the antitrust license conditions in Appendix C to this license.
                    'hMed (4WosMue_1 Loading Initial Test Program (Section 14, SSERC i
Any changes to the Initi                agr     escribed in Section 14 of the FSAR made in a         rde e wit             'sions of 10 CFR 50.59
                                                                                     ~
sh                    in accordance    with 50.59(b)  wi
                                        ~
h (5),rTYmemrm leted e Inspection Program (Section 6.6.3, SSER #7)f Within six                    ter   ce   'n                   ermal power,'-6Ef60 shallp4tF'Ini                      rvice Inspection Program r uired1y 10 CFR 50.55(a) for the                        's review
                       ..and      proval.
(6) Fire Protection (Section 9.5, SER, SSER #1, 2, 3, 4, 7 and 8)                           ,
NM8 96E460 shall comniv with the following requirements of the fire p eo - protection programP GE-Ife shall implement and maintain in effect all provisions of the approved fire protection program as described in the Final Safety Analysis Report as amended, for the Perry Nuclear Power Plant and as approved in the Safety Evaluation Report (NUREG-0887) dated May 1982 and Supplement Hos.1 thru 10
                        .thereto, subject to the following provisions:
9E9CO
: a. GEMS may cake changes to the approved fire protection program without prior approval of the Commission only if those changes would not adversely affect the ability to achieve and maintain safe shutdown in the event of a fire.
    *The parenthetical notation following the title of many license conditions denotes the-section of the Safety Evaluation Report (SER) and/or its supplements wherein the license condition is discussed.                                                                      ;
Amendment No. 36

i a
Attachment 2               ;
PY-CEI/NRR-1794L Page 12 of 32              ;
i i
l
: 3) ebbed (7)/ Tretsled Control Room Desion Review (Section 18, SSERJJV I
shall             he-r ain' . ivities to complete the               [
sev     4   orrect all human
                       'engineerina Detailed Control       Room M (HED's) ident S cies                        .          nt 1.
Attac . nt 1 is hereby incorporated into this license.                          t (8) Emeroency Plannina (Section 13.3, SSER #10)
In the event that the NRC finds that the lack of proaress in completion of the procedures in the Federal Emergency Management Agency's final rule (44 CFR Part 350) indicates that a major substantive problem exists in achieving or maintaining an adequate state of emergency preparedness, t'he provisions of 10 CFR 50.54(s)(2) will apply.                        .     ;
F (9) TDI Diesel Generator Reliability (Section 9.6.3, SSER #6, 8 & 10) ps0co
                       -CE4C+ shall comply with the requirements identified in Attachment 2            i relative to the Transamerica Delaval, Inc., diesel engines.
Attachment 2 is hereby incorporated into this license, paeco                                                                                   <
D. 4El{4 is exe.npted from: 1) the requirements of Section III.D.2(b)(ii),
containment airlock testing requirements, Appendix J to 10 CFR Part 50, due to the special circumstance described in.Section 6.2.6 of SER             See NRC Supplement No. 7 authorized by 10 CFR 50.12(a)(2)(iii); and 2) the Exemption requirements of Section IV.F., Full Pa'r ticipation Exercise, of              Letter Appendix E to 10 CFR Part 50, due to the special circumstance                 Dated described in the Exemption, dated November 6,1986. These exemptions 1/22/88 are authorized by law, will not present an undue risk to the public health and safety and are consistent with the common defense and security. The exemptions are hereby granted pursuant to 10 CFR 50.12.
With the granting of these exemptions, the facility will operate, to                    ,
the extent authorized herein, in confomity with the application, as amended, the provisions of the Act, and the rules and regulations of the Comission.
L pwco E. EEiC+ shall fully implement and maintain in effect all provisions of                    l the physical security, guard training and qualification, and safe-           See i
I guards contingency plans previously approved by the Comission and            Amend. 11 all amendments and revisions to such plans made pursuant to the authority of 10 CFR 50.90 and 10 CFR 50.54(p). The plans, which               Dated-contain Safeouards Information protected under 10 CFR 73.21, are              3/15/88 entitled: " Perry Nuclear Power Plant Security Plan," with revisions Item (2) submitted through May 15,1986; " Perry Nuclear Power Plant Security Force Training and Qualification Plan," with revisions submitted through August 12, 1986; and " Perry Nuclear Power Plant Safeguards Contingency Plan" (Chapter 8 of the Security Plan),
with revisions submitted through May 15, 1986.

                                                                                               \
l Attachment 2 PY-CEI/NRR-1794L Page 13 of 32
_  (,  _
i NEtMos f     E> cept as other wisr> provided in[the Technical Specifications or Envi-ronmentcl Protection Plan, f M & shall report any violations of the requirements contained in Section 2.C of this license in the following manner: initial notification shall be made within 24 hours to the NRC Operations Center via the Emergency Notification System with written           i followup within thirty (30) days in accordance with the procedures described in 10 CFR 50.73(b), (c) and (e).
G. The licensees shall have and maintain financial protection of such             l type and in such amounts as the Commission shall require in accordance with Section 170 of the Atomic Energy Act of 1954, as amended, to cover public liability claims.
H. This license is effective as of the date of issuance and shall expire at midnight on March 18, 2026.
FOR THE NU. TEAR REGl.ATO    COMMISSION 1
c --
i Harold R. Denton, Director Office of Nuclear Reactor Regulation Attachments / Appendices:                                                                  I
: 1. Attachments 1 - 2
: 2. Appendix A - Technical Specifications (NUREG-1204)
: 3. Appendix B - Environmental Protection Plan l   4. Appendix C - Antitrust Conditions 1
Date of Issuance:     November 13, 1986                                                    l l
l l

Attachment 2 PY-CEI/NRR-1794L Page 14 of 32 M UCHMf fri 1 10 f&f -58       'b,le{,J                        y
_=
DETAllED CONTROL ROOM DESIGN REVIEW Befor start of the 100-hour warranty run,4E4 shall implement correctione to hu. q engineering discrepancies per commitments in Supplement 2 to th Detailed Control Room Design Review Summary Report, dated May 28, 1986 and in a lett( from H. R. Edelman to W. R. Butler, dated August 26, 1986 2
Before start       following the first refueling outage, E H shall im ement corrections to uman engineering discrepancies per commitments i (a) the Deta' led Control Room Design Review Sumary Rep rt, dated January I'- 1985.
(b) Supplement 1 o the Detailed Control Room Desi n Review Summary Report, dated .ctober 14, 1985.                              .
ement 1 to the Detail      Control Room Design (c) Revision 1 to Su                                  985.
Review Sumary Report, dated October 21 (d) Supplement 2 to the Debiled Control          oom Design Review Sumary Report, dated May 28, 19 6.
(e) The Control Room Validation um ry Report, dated July 11, 1986.
(f) Errata sheets to Supplement '          the Detailed Control Room Review Sumary Report, attached to et r PY-CEI/NRR-0510 L, dated July 29, 1986.
(g) Detailed Control Room sign Review First Refuel HED Revisions Report, attached to tter PY-CEI/NRR- 946L, dated February 10, 1989.
Before startup following        e first refueling outage,          shall also provide results of the final sou surveys in the control room and at the remote shut-down facilities for NR review per the commitment in Su lement 1 to the Detailed Control Roo       esign Review Sumary Report, dated October 14, 1985.
Before startup fo owing the second refueling outage C4M sh 11 complete the augmented verifi tion of human engineering discrepancy corre ions imple-                 ,
mented after f 1-power licensing per the commitment in Supplem t 2 to the Detailed Con 01 Room Design Review Sumary Report, dated May 28, 986.                     .
l 4I+ shall a) o correct any problems identified by the augmented ve 'fication             j before st'(tup following the second refueling outage per the comitm t in a letter f om H. R. Edelman to W. R. Butler, dated August 2~6, 1986.                      ;
Amendment No. 23                     i l
l

Attachment 2
  '                                                                    PY-CEI/NRR-1794L Page 15 of 32 ATTACHMENl 2_
10 NPF-58 T HANSAMLRICA DE L AVAL , INC. ]TDI) DIESE1 EElNE REQUIREMENIS MWD EHE6 shall comply with the following requirements related to the TDI deisel engines:
: 1. Changes to the naintenance and surveillance program for the TD1 diesel engines, as identified and approved by the HRC staff in the supplemental safety evaluation report in the letter dated July 8,           i 1986, shall be subject to the provisions of 10 CFR 50.59.                  !
: 2. Crankshafts shall be inspected as follows:
The oil holes and fillets of the three main bearing journals subject to the highest torsional stresses (Nos. 4, 6, 8) shall be examined with fluorescent liquid penetrant and, as necessary, eddy current, during the one-time 5 year and each 10 year major disassembly. The same inspections on oil holes and fillets shall be per. formed on at least three crankpin journals between journals 3 and 8.
: 3. Cylinder blocks shall be inspected at intervals calculated using the cumulative damage index (CDI) model and using inspection methodologies described by Failure Analysis Associates, Inc., (FaAA) in the report entitled " Design Review of TDI R-4 Series Emergency Diesel Generator        -
Cylinder Blocks" (FaAA-84-9-11) dated December 1984. Liquid penetrant
              -inspection of the cylinder liner landing area shall be performed any time liners are removed.
: 4. The following air roll tests shall be performed as specified below,          !
t except that air rolls shall not be performed on an operable TDI             I Standby Diesel, if the other TDI Standby Diesel is already inoperable:
The engines shall be rolled over with the airstart system and the            '
cylinder stopcocks open prior to planned starts, unless that start occurs within 4 hours of a shutdown. The engines shall also be rolled over with the airstart system and the cylinder stopcocks open after 4 hours, but no more than 8 hours after engine shutdown and then rolled over once again approximately 24 hours after each shutdown. In the event an engine is removed from service for any reason other than the rolling over procedure prior to expiration of the 8 hour or 24 hour periods noted above, that engine need not be rolled over while it is out of service. The licensee shall air roll the engine over with the stopcocks open at the time it is returned to service. The origin of any water detected in the cylinders must be determined and any cylinder head which leaks due to a crack shall be replaced. No cylinder heads that contain a through-wall weld repair where the repair was performed from one side only shall be used on the engines.
S. If inspection of either TDI engine reveals cracks in the crankshaft or in the cylinder block between stud holes of adjacent cylinders, this
'                condition shall be reported promptly to the NRC staff and the affected engine'd shall be considered inoperable. The engines shall not be restored to " operable" status until the proposed disposition and/or
* corrective actions have been approved by the NRC staff.
Amendment No. 24}}