ML18095A372

Forwards Rept & Certification of Financial Assurance for Decommissioning for Plants,Per 10CFR50.75

ML18095A372
Person / Time
Site:	Peach Bottom, Salem, Hope Creek
Issue date:	07/24/1990
From:	Fryling R Public Service Enterprise Group
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NUDOCS 9007310281
Download: ML18095A372 (58)

Text

0 Ps~G Publ.rvice

• & Electric arid Gas Company 80 Park Plaza, Newark, NJ 07101 I 201 430-6468 MAI LI NG ADDRESS I P.O.. Box 570, Newark, NJ 07101 Richard Fryling, Jr. General Solicitor - T5E July 24, 1990 Document Control Desk

u. s. Nuclear Regulatory Commission Washington, DC 20555 RE: Salem Nuclear Generating Station, Units 1 and 2, Docket Nos. 50-272 and 50-311 Hope Creek Generating station, Docket No. 50-354 Peach Bottom Atomic Power Station, Units 2 and 3, Docket Nos. 50-277 and 50-278 Gentlemen:

Enclosed for filing pursuant to 10 C.F.R.

Section50.75 are the following:

1. Report and Certification of Financial Assurance for Decommissioning the Salem Nuclear Generating Station, Unit 1;

2. Report and Certification of Financial Assurance for Decommissioning the Salem Nuclear Generating Station, Unit 2;

3. Report and Certification of Financial Assurance for Decommissioning the Hope Creek Generating Station;

4. Report and Certification of Financial Assurance for Decommissioning the Peach Bottom Atomic Power Station, Unit 2;

5. Report and Certification of Financial Assurance for Decommissioning the Peach Bottom Atomic Power Station, Unit 3.

Questions related to these submittals should be directed to the undersigned.

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General yQng, Jr.

ol itor PDR ADOCK 05000272 Public Servi e Electric I PNlJ and Gas Company The Energy People 95-4981 (3M) 3-90

PUBLIC SERVICE ELECTRIC AND GAS COMPANY REPORT AND CERTIFICATION OF FINANCIAL ASSURANCE FOR DECOMMISSIONING SALEM NUCLEAR GENERATING STATION, UNIT 1 DOCKET NO. 50-272 OPERATING LICENSE NO. DPR-70 JULY 1990

• REPORT AND CERTIFICATION OF FINANCIAL ASSURANCE FOR DECOMMISSIONING THE SALEM NUCLEAR GENERATING STATION. UNIT 1 This report is submitted by Public Service Electric and Gas Company ("PSE&G"), holder of Facility Operating License DPR-70 for the Salem Nuclear Generating Station, Unit 1 ("Salem Unit 1 11 or "the Unit") pursuant to 10 C.F.R. S0.33(k) (2) and 50.75. The other co-owners of the unit are the Philadelphia Electric Company, Atlantic city Electric company and Delmarva Power &

Light Company. Each co-owner is filing separately on its own behalf.

The purpose of this report is to indicate how reasonable assurance will be provided that funds in proportion to PSE&G's ownership share will be available to decommission Salem Unit 1, and to certify that financial assurance for decommissioning will be provided in the amount required by regulation.

1. The respective ownership shares of Salem Unit 1 are as follows: Public Service Electric and Gas Company, 42.59%;

Philadelphia Electric Company, 42.59%; Atlantic City Electric Company, 7.41%; and Delmarva Power & Light Company, 7.41%.

2. Based upon the requirements of 10 C.F.R. 50.75(c),

including adjustment for the escalation factors of labor, energy and waste burial, the amount presently required to be certified to the NRC as available for decommissioning Salem Unit 1 is

$142.1 million in 1990 dollars as shown on Appendix A, attached *

3. On January 3, 1989, PSE&G, the Office of the Public Advocate (Division of Rate Counsel), and the staff of the New Jersey Board of Public Utilities ("BPU") entered a Joint Stipulation before the BPU in Docket No. ER85121163. A Decision and Order Approving Joint Stipulation was entered by the BPU on January 4, 1989. Pursuant to the Joint Stipulation, PSE&G has established an Amended Master Decommissioning Trust Agreement for Hope Creek Generating Station, Salem Nuclear Generating Station, and Peach Bottom Atomic Power Station. The Successor Trustee, the Chase Manhattan Bank, N.A., is authorized by law to act as a trustee. Its trust operations are regulated and examined by (a) the Federal Reserve Bank of New York; (b) the New York Banking Department; and (c) the Office of the Comptroller of the Currency.

4. Funds deposited in the Master Trust are segregated from the assets of PSE&G and beyond its control and direction for other than authorized withdrawals. The Successor Trustee is authorized and directed to withdraw from the trust funds for the respective plants solely upon appropriate certification that a specified amount is due and owing for goods or services provided in connection with decommissioning the plant, or for administrative costs of the Master Trust. The Master Trust therefore constitutes an external sinking fund within the meaning of 10 C.F.R. S0.75(e) (ii). A copy of the executed Master Trust is attached as Appendix B.

- 3 -

• 5.

costs.

Paragraph 3.1 of the Ownership Agreement for Salem unit 1 obligates each co-owner to pay its share of decommissioning

6. As of December 31, 1989, the amount paid into the Master Trust by PSE&G for decommissioning Salem Unit 1 is $20.186 million. PSE&G has elected to treat this amount as a prepayment of amounts to be contributed to the fund annually, commencing with 1990, until the amount payable in any given year shall exceed the remaining prepaid funds and earnings thereon.

7. PSE&G has determined the annual contributions to be paid into the Salem Unit 1 trust fund of the Master Trust which will provide the amount required by regulation for decommissioning the unit. The total amount to be paid was determined by multiplying PSE&G's ownership percentage (42.59%)

times the amount required to be available for decommissioning the unit ($142.1 million). This aggregate amount is $60.505 million.

8. The existing operating license for Salem Unit 1 currently expires on September 25, 2008 (dating 40 years from the issuance of the construction permit for Salem Unit 1). In recent years, the Commission has routinely granted operating license amendments to reflect an expiration date 40 years from the issuance of the operating license. This amendment permits a licensee to obtain the benefit of the full 40-year term authorized by law.

• 9. Consistent with *the Commission's actions reactor cases, PSE&G requested such an amendment for Salem Unit 1 on August 3, 1987. Because this request in other has been routinely granted in other cases, and PSE&G has not been advised by the NRC of any obstacle to the grant of its request, the funding schedule for decommissioning Salem Unit 1 has been based upon an operating license expiration date of August 13, 2016 per the license amendment request.

10. Given the 26 years remaining in the term of the operating license for Salem Unit 1 (per the amendment request) ,

the minimum NRC annual funding requirement for the Salem Unit 1 fund of the Master Trust is $2.327 million as shown on Appendix c, attached. Annual contributions in this amount, as adjusted by

• the escalation factors until the prepaid fully utilized.

in 10 C.F.R.

contributions and 50.75(c) (2), will be made earnings thereon have been

11. Under the BPU ratemaking order applicable to Salem Unit 1, the amount recoverable for decommissioning is based on 20% net negative salvage value. This amount is presently included in PSE&G's base rates for Salem Unit 1 and is being recovered annually. That amount will be added each year to the Salem Unit 1 fund of the Master Trust and will be treated as prepayments for future years insofar as they exceed current annual requirements. It is anticipated that a future ratemaking case will be filed sufficiently in advance to provide additional

• funding process.

12.

in a timely manner, assuming Accordingly, based upon the the normal ratemaking funding schedule for Salem Unit 1, PSE&G is contributing $2.327 million in prepaid funds to the Salem Unit 1 fund of the Master Trust for 1990.

Contributions will be made for future years up to and including 2016, as adjusted by the escalation factors specified by 10 C.F.R. 50.75(c) (2) and any other factors which warrant further adjustment.

13. Based upon the foregoing, Public Service Electric and Gas Company hereby certifies that financial assurance will be provided for the decommissioning of Salem Unit 1 in the aggregate amount required by 10 C.F.R. 50.75(c)

• Sworn and subscribed before me t.his &Ul/-U.ay of July, 1990.

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Appendix A Derivaticn of Esclaticn Factor, 1990 Escalated Cost and Co-Owners' Share of Escalated Cost for Salem Unit No. 1 Escalatioo Factor Weighted Escalaticn Escalation Factor Percentage Factor Labor 1.213 65.~ 0.788 Energy 0.947 13.~ 0.123 Burial 2.007 22.~ 0.442 1990 Escalaticn Factor 1.353 1990 Escalated Cost 1~ MinilWln Deccmnissiaring Cost per NRC -

1986 Dollars $105,000 Escalatioo Factor for 1990 1.353 Escalated Cost in 1990 $142,064 Co-Otmers' Share of Escalated Cost Public Service Electric and Gas canpany - 42.59% $60,505 Pbiladellilia Electric CCJnpany - 42.59% $60,505 Atlantic City Electric canpany - 7.41% $10,527 Delmarva Potier and Light CClllpany - 7.41% $10,527

Appendix B PUBLIC SERVICE ELECTRIC AND GAS COMPANY AMENDED MASTER DECOMMISSIONING TRUST AGREEMENT FOR HOPE CREEK GENERATING STATION, SALEM NUCLEAR GENERATING STATION, AND PEACH BOTTOM ATOMIC POWER STATION DATED AS OF* JANUARY 3, 1989

-i-

• TABLE OF CONTENTS ARTICLE I. DEFINITIONS.

1.01 Definitions ......................... ~ ...... 4 ARTICLE II. MASTER TRUST PURPOSES, NAME, FUNDS AND RELATED MATTERS.

2.01 Master Trust Purposes ..................... . 10 2.02 Appointment of successor Trustee .......... . 10 2.03 Acceptance of Appointment ..........*....... 11 2.04 Name of Master Trust ......*.....*.......... 11 2.05 Segregation of Master Trust *............... 11 2.06 Designation of Funds ...***..*.....**....*.. 12 2.07 Authorized Representative(s) *.**.....*..... 12 2.08 No Authority to Conduct Business ....**..... 13 2.09 No Transferability of Interest in Master Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE III. CONTRIBUTIONS *

• 3.01 3.02 3.03 ARTICLE IV.

4.0l Initial Transfer of Assets *.*.**.*.........

Subsequent Contributions .****.****.**.**...

Subsequent Adjustments .*.**.*.**.*.*****...

DISTRIBUTIONS.

Payment of Decommissioning Costs ****.*.**.. 15 14 14 14 4.02 Payment of Expenses of Administration ****** 16 4.03 Fees. * . * . * * * . . * . . . . . . * . * . . . . . . . . . * . . . . . . . . . 17 4.04 Liquidation of Investments ***************** 17 ARTICLE V. TERMINATION.

5.01 Termination of Master Trust ***************. 17 5.02 DistriDution of Master Trust or Qualified Fund* Upon Termination ******** 18 ARTICLE VI. SUCCESSOR TRUSTEES.

6.0l Desiqnation and Qualification of successor Tru*tee{s) *********************** 19 6.02 Exoneration From Bond ********************** 20 6.03 Rasiqnation .................... ........... . 20 6.04 Valuation of Maater Trust ****************** 21 6.05 Accounts and Reports ********************** 21

-ii-6.06 Tax Returns and Other Reports .............. 23 6.07 Liability .................................. 25 6.08 Indemnity of Successor Trustee ............. 27 ARTI:LE VII. INVESTMENTS.

7.01 Appointment of Investment Manager(s) ....... 28 7.02 Direction by Investment Manager(s) ......... 29 ARTICLE VIII. SUCCESSOR TRUSTEE,S GENERAL POWERS.

8.01 Registration of Securities ........*....*... 33 8.02 Cash Sweep Function ............*......*..*. 33 8.03 Retention and Removal of Professional and Employee Services ........*...**.*.**... 33 8.04 Delegation of Ministerial Powers ..*..**.... 34 a.as Powers of Successor Trustee to Continue Until Final Distribution *.*****..* 34 8.06 Discretion in Exercise of Powers ***.***.*.* 34 ARTICLE IX. SUCCESSOR TRUSTEE,S INVESTMENT POWERS.

9.01 Preservation of Principal. *****************

• 3 s 9.02 Investment of Master Trust ****************. 36 9.03 Pooled Investments. * * * * * * * . * * * * * * . * * * * * * . *

• 3 7 9.04 Management of Master Trust ****************. 37 9.05 Borrowinq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7 ARTICLE X. MISCELLANEOUS.

10.01 Haadinqs. * * * * . * * * * * * * * . * . * * * * * * * * * * * * * . . * *

• 3 8 10.02 Particular Words. * * * * * * * * * * * * * . . * * * * * * * * * *

• 3 8 10.03 Severability of Provisions ***************** 38 10.04 Form and Content of Communication********** 39 10.05 Delivery of Notice* Under Agreement ******** 39 10.06 Alterations and Amendments ***************** 40 10.07 Succe**or* and Assigns ********************* 41 10.08 Governinq Juri*diction *.******************* 41 10.09 Accountinq Year **************************** 41 EXH:IBIT A* CERTIFICATE

AMENDED MASTER DECOMMISSIONING TRUST AGREEMENT SECOND AMENDMENT made effective this 3rd day of January, 1989 to the Master Decommissioning Trust

~greement, as amended, for Hope Creek Generating Station dated as of February 29, 1988 by and between Public Service Electric and Gas Company, a New Jersey corporation (the Company), and Boston Safe Deposit and Trust Company, a Massachusetts trust company having trust powers (Original Trustee) .

RECITALS OF THE COMPANY WHEREAS, the Company is subject to regulation by the New Jersey Board of Public Utilities (BPU), an agency of the State of New Jersey created and existing pursuant to N.J.S.A. Section 48:2-1, et seq., and the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC), both agencies of the United States government created and existing pursuant to 42 u.s.c.

Sectiona 7134 and 7171, and 42 u.s.c. Section 5841, r**pective1*y 1 and WHEREAS, the BPU ha* permitted the Company to include in its co*t ot service for ratemaking purposes certain amounts to be contributed by the Company to a decommissioning fund in order to provide for the Company's percentage share of decommissioning expenses associated

with its ownership of the Hope Creek Nuclear Gener~ting station (95%) (Hope Creek) I the Salem Nuclear Generating station, Unit 1 and Unit 2 (42.59% each) and the Peach Bottom Atomic Power Station, Unit 2 and Unit 3 (42.49%

each) (each a "Plant" and collectively the "Plants), and it is possible that, in the future, the FERC also will permit the Company to include certain amounts for decommissioning the Plants in its cost of service for ratemaking purposes; and WHEREAS, pursuant to Section 468A of the Internal Revenue Code of 1986, as amended (Code), certain Federal income tax benefits are available to the company by creating and funding qualified nuclear decommissioning funds associated with the Plants: and WHEREAS, the Company heretofore entered into a Master Oecommissioninq Trust Aqreement (Aqreement) with Boston Safe Deposit and Trust Company aa Trustee, effective as of February 29, 1988 in order to establish a Master Trust for the collective investment of the assets of the qualified and nonqualitied decommissioninq funds (within the meaning ot Section 468, a* amended (Code)) to provide for its 95%

share ot the dacommi**ioninq co*t* ot Hope Creek; and WHEREAS, th* Aqreement wa* amended and restated as of May 16, 1988 in order to appoint The Chase Manhattan Bank, N.A. as succes*or Trustee to the Master Tru*t upon the

resignation of Boston Safe Deposit and Trust Company as Trustee, and to amend certain terms of the Agreement; and WHEREAS, the Company wishes to continue to maintain the Master Trust for the collective investment of the assets of the qualified and nonqualif ied nuclear decommissioning funds for Hope Creek: and WHEREAS, the Company wishes to further amend the Agreement to establish both qualified and nonqualified nuclear decommissioning funds for each Plant in addition to Hope Creek to hold monies for decommissioning its ownership interest in each such Plant within the Master Trust; and WHEREAS, for administrative convenience, the Company wishes to restate the Agreement, as amended, in its entirety; and RECITALS OF THE SUCCESSOR TRUSTEE WHEREAS, Th* Chase Manhattan Bank, N.A. is a national bankinq association with trust powers; and WllBREAS, Th* Chase Manhattan Bank, N.A. is willing to continue to **rv* a* Successor Trust** to the Master Trust on th* teriaa and conditions herein set forth and does hereby consent to th* amendment and restatement of the Aqreement as set forth herein.

NOW, THEREFORE, in consideration of th* mutual promises herein contained, the Company hereby aqrees to

• cause to be delivered to the Successor Trustee and the successor Trustee hereby agrees to continue to hold the assets presently comprising the Master Trust and to receive subsequent contributions thereto beginning on the date first written above; TO HAVE AND TO HOLD, such assets of the Master Trust and such additional contributions as may from ti~~ to time be added thereto as provided herein, together with the proceeds and reinvestments thereof; IN TRUST NEVERTHELESS, for the uses and purposes and upon the terms and conditions hereinafter set forth.

I. DEFINITIONS *

• 1.01 Definitions. As used in this Amended Master Decommissioning Trust Agreement, the following terms shall have the following meanings:

(1) "Agreement" shall mean and include this Master Decommissioning Tru*t Agreement as amended and restated by this Second Amendment and as the same may from time to time be further amended, modified or supplemented.

(2) *Authorized Representative" shall mean the Senior Executive Vic* President of th* company or such other of ticer* ot the Company aa shall be designated in writing to the Tru*tee by said Senior Executive Vice President ot the Company.

• (J) BPU" shall mean the New Jersey Board of Public Utilities, an agency of the State of New Jersey created and existing pursuant to N.J.S.A. § 48:2-1, et seq.

(4) "Certificate" shall mean a document properly completed and executed by the individuals duly authorized by the Company and substantially in the form of Exhibit A hereto.

(5) Code" shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time.

(6) "Company" shall have the meaning set forth in the first paragraph of this Agreement.

(7) "Contribution" shall mean any contribution, cash or otherwise, made to the Funds.

(8) "Decommissioning Costs" shall mean the expenses incurred in decommissioning the Plants.

(9) "Excess Contribution" shall have the meaning set forth in Section 3.03 hereof.

(10) "FERC" shall mean the Federal Energy Regulatory Commission, an agency of the United States government created and exi*tin9 pursuant to 42 u.s.c. §§ 7134 and 7171.

(11) "Fund*" shall mean the Qualified Funds and the Nonqualified Funds collectively.

(12) "Hope Creek" shall mean the Company's ownership interest (95t) in the Hope Creek Nuclear Generating Station *

• (lJ) "Hope Creek Nonqualified Fund" shall consist of Contributions by the Company for decommissioning Hope Creek (but only to the extent such Contributions are not deposited and maintained in the Hope Creek Qualified Fund) plus earnings and appreciation thereon.

(14) "Hope Creek Qualified Fund" shall mean the nuclear decommissioning reserve fund established for Hope Creek for purposes of Section 468A of the Code, and shall consist of Contributions by the Company for decommissioning Hope Creek plus earnings and appreciation thereon, which Contributions are specified in a Schedule of Ruling Amounts with respect to Hope Creek.

(15) "Investment Account" shall have the meaning set forth in Section 7.01 hereof.

(16) "Investment Manager(s)" shall mean the investment coun*elor(s), if any, designated from time to time by the Company.

(17) "Inv**tment Manager Agreement(s)" shall mean the agreement(*) between the Company and one or more inv**tllent coun**lor(s) which agreement governs the inve*tllent of all or a portion of th* Master Trust.

(18) "Ma*t*r Trust" shall consist of all Contribution* to th* Funds, together with the proceeds and reinvestments thereof.

(19) "Nonqualified Funds" shall mean the Hope Creek Nonqualified Fund, the Peach Bottom Two Nonqualif ied Fund,

• the Peach Bottom Three Nonqualified Fund, the Salem One Nonqualified Fund and the Salem Two Nonqualified Fund.

(20) "NRC" shall mean the Nuclear Regulatory commission, an agency of the United States government created and existing pursuant to 42 u.s.c. § 5841.

(21) "Order" shall mean any order of the BPU, FERC, or NRC issued in connection with decommissioning the Plants.

( 22) "Original Trustee" shall mean Boston .Safe Deposit and Trust Company.

(23) "Peach Bottom Three" shall mean the company's ownership interest (42.49%) in Unit Three of the Peach Bottom Atomic Power Station *

• (24) "Peach Bottom Three Nonqualified Fund" shall consist of Contributions by the Company for decommissioninq Peach Bottom Three (but only to the extent such Contributions are not deposited and maintained in the Peach Bottom Three Qualified Fund) plus earninqs and appreciation thereon.

(25) "Peach Bottom Three Qualified Fund" shall mean th* nuclear decommissioninq reserve fund established for

• peach Bottom Three tor purpo*e* ot section 468A ot the Code, and shall consist of contributions by the company tor decommia*ioninq Peach Bottom Three plus earninqs and appreciation thereon, which Contributions are specitied in

• a Schedule of Ruling Amounts with respect to Peach Bottom Three.

( 2 6) "Peach Bottom Two" shall mean the Company's ownership interest (42.49%) in Unit Two of the Peach Bottom Atomic Power Station.

(27) "Peach Bottom Two Nonqualified Fund" shall consist of Contributions by the Company for decommissioning Peach Bottom Two (but only to the extent such contributions are not deposited and maintained in the Peach Bottom Two Qualified Fund) plus earnings and appreciation thereon.

(28) "Peach Bottom Two Qualified Fund" shall mean the nuclear decommissioning reserve fund established for

• Peach Bottom Two for purposes of section 468A of the Code, and shall consist of Contributions by the Company for decommissioning Peach Bottom Two plus earnings and appreciation thereon, which Contributions are specified in a Schedule of Ruling Amounts with respect to Peach Bottom Two.

(29) "Plant*" shall mean Hope Creek, Peach Bottom Two, Peach Bottom Three, Salem one and Salem Two, collectively.

(30) "Qualified Funds" shall mean the Hope creek Qualified Fund, th* Peach Bottom Two Qualified Fund, the Peach Bottom Three Qualified Fund, the Salem One Qualified Fund and the Salem Two Qualified Fund, collectively *

• (31) "Salem One" shall mean the Company's ownership interest (42.59%) in Unit One of the Salem Nuclear Generating Station.

(32) "Salem one Nonqualified Fund" shall consist of Contributions by the Company for decommissioning Salem One (but only to the extent such Contributions are not deposited and maintained in the Salem One Qualified Fund) plus earnings and appreciation thereon.

(33) "Salem One Qualified Fund" shall mean the nuclear decommissioning reserve fund established for Salem One tor purposes of section 468A of the Code, and shall consist of Contributions by the Company for decommissioninq Salem one plus earninqs and appreciation thereon, which contributions are specified in a Schedule of Rulinq Amounts with respect to Salem One.

(34) "Salem Two" shall mean the Company's ownership interest (42.59t) in Unit Two of the Salem Nuclear Generatinq Station.

(35) "Salem Two Nonqualitied Fund" shall consist of Contril:Ntion* by the Company for decommissioninq Salem Two (but only to the extent such Contribution* are not depo*ited and maintained in th* Salem Two Qualified Fund) plus earninq* and appreciation thereon.

(36) "Salem Two Qualified FUnd" shall mean th*

nuclear decommisaioninq reserve fund eatablished tor Salem Two tor purposes of section 468A of th* Code, and shall

• consist of Contributions by the Company for decommissioning Salem Two plus earnings and appreciation thereon, which Contributions are specified in a Schedule of Ruling Amounts with respect to Salem Two.

(37) "Schedule of Ruling Amounts" shall have the meaning set forth in section 468A(d) of the Code.

(38) "Service" shall mean the Internal Revenue Service.

(39) "Successor Trustee" shall mean The Chase Manhattan Bank, N.A., or any substitute entity subsequently appointed as a successor Trustee pursuant to Section 6.01 hereof.

(40) "Valuation Date" shall have the meaning set forth in Section 6.04 hereof.

II. MASTER TRUST PURPOSES, NAME, FUNDS AND RELATED MA'rI'ERS.

2.01 Master Trust Purposes. The purposes ot this Master Trust are to hold funds tor the contemplated decommi**ioninq ot the Plants, to constitute qualified and nonqualified decommisaioninq funds therefor (the Qualified Fund* beinq **tablished pursuant to section 468A of the Code, any applicable successor provision and the requlations thereunder) and to comply with any order.

2.02 Appointment of succes*or Trust*** By execution ot this Aqreement, the Company appoints Th* Chase

• Manhattan Bank, N.A. as Successor Trustee of the Master Trust.

2.03 Acceptance of Appointment. By execution of this Agreement and upon the terms and conditions herein set forth, The Chase Manhattan Bank, N.A. accepts the appointment as successor Trustee of this Master Trust and each of the Funds. The Successor Trustee shall receive any assets of the Master Trust transferred to it by the original Trustee or subsequent Contributions from the Company and shall hold, manage, invest, reinvest and administer such assets and Contributions, together with earnings and appreciation thereon as provided for in this Agreement .

2.04 Name of Master Trust. The assets received by the Successor Trustee from the Original Trustee or Contributions from the Company plus earnings thereon shall constitute the "Public Service Electric and Gas Company Master Oecommisaioninq Trust."

2.05 Segregation of Master Trust. Th* Master Trust shall be **qregated by the Successor Trustee into the Funds aa followa:

(a) Hop* Creek Qualified FUnd; (b) Hop* Creek Nonqualified Fund; (c) Peach B~ttom Two Qualified Fund; (d) Peach Bottom Two Nonqualified Fund;

(*) Peach Bottom Three Qualified Fund;

• ( f)

(g)

Peach Bottom Three Nonqualified Fund; Salem One Qualified Fund; (h) Salem One Nonqualified Fund;

( i) Salem Two Qualified Fund; and (j ) Salem Two Nonqualified Fund.

The Successor Trustee shall maintain such records as are necessary to maintain each Fund separately from each other Fund.

2.06 Designation of Funds. Upon (i) the initial transfer to the successor Trustee as specified in Section 3.0l; (ii) any subsequent Contribution to the Master Trust pursuant to Section 1.02; (iii) any adjustment to the Nonqualif ied Funds or Qualified Funds pursuant to Section 3.03; or {iv) any withdrawal from the Master Trust for Decommissioning Costs pursuant to Section 4.01, or for administrative expenses pursuant to Section 4.02, ~he Company shall designate the Fund(s) which is to be credited or debited by such contribution, addition, adjustment, or withdrawal, and the Successor Trustee shall credit or debit the Fund(s) in accordance with such desiqnation and a* directed by the Company.

2.07 Authorized Representatives. Th* Company shall provide th* succeaaor Tru*t** with a written statement setting forth the names and specimen signatures of the Authorized Repre*entative(s). Until otherwise notified in writing by th* company, the successor Trustee may rely

• upon any written notice, instruction, direction, certificate or other communication believed by it to be genuine and to be signed or certified by any one or more Authorized Representatives, and the Successor Trustee shall be under no duty to make any investigation or inquiry as to the tru~h or accuracy of any statement contained therein. If the Company designates more than one Authorized Representative, the Authorized Representatives may act on behalf of the Company as a group or may designate one among themselves to act on behalf c# the Company.

2.08 No Authority to Conduct Business. The purposes of this Master Trust are limited to the matters set forth in Section 2.01 above, specifically, and there is no objective to carry on any business unrelated to the Master Trust purposes set forth in Section 2.01 above hereof, or divide the gains therefrom.

2.09 .No Transferability of Interest in Master Trust.

Except with respect to a disposition of all or a portion of th* Company'* interest in the Plants, the interest of th* C011pany in th* Master Trust is not transferable, whether voluntarily or involuntarily, by the Company nor subject to the claims of creditors of the Company; provided, however, that any creditor of th* Company as to which a Certif icata has been properly completed and submitted to th* Successor Trustee may assert a claim

• directly against the Master Trust in an amount nae to exceed the amount specified on such Certificate.

III. CONTRIBUTIONS.

3.01 Initial Transfer of Assets. Effective as of May 16, 1988, the Company caused to be delivered to the Successor Trustee the assets then comprising the Master Trust.

3.02 Subsequent contributions. From time to time prior to the termination of this Master Trust, the Company may make, and the Successor Trustee shall accept, Contributions to the Master Trust to satisfy the purposes of this Master Trust as set forth in Section 2.01, which

• Contributions may be to a Qualified Fund or to a Nonqualif ied Fund. The Successor Trustee shall not be responsible tor the collection ot Contributions from the company to the Maater Trust.

3.03 Subsequent Adjustments. The Successor Trustee and the Company understand and aqree that the Contril:Ntion* aade by the Company to a Qualified Fund from time to time may exceed th* amount permitted to b* paid into *uch 1"uncl purauant to section 468A of the code and any requlation* thereunder based upon chanq** in estimates, subaequent development* or any other event or occurrence which could not reasonably have been foreseen by the Company at th* time such Contribution was made

(Excess Contribution). Upon the written certification of the Company to the Successor Trustee setting forth the amoun~ of the Excess Contribution and stating that such Excess Contribution should be transferred to a different Fund or to a particular person or entity (including the Company) , the Successor Trustee shall transfer or pay such Excess Contribution, as the case may be, to such different Fund, or to such person or entity (including the Company) specified by the Company in the written certification.

In all cases, the Successor Trustee shall not distribute any Excess Contr,ibution unless it receives an opinion of legal counsel to the company stating that such distribution will not lead to disqualification of the Quaiified Fund(s) from the application of section 468A of the Code and that such distribution will not constitute a violation of any Order.

The succes*or Tru*tee and th* company further understand and agree that a transfer of assets among the Funds may be nece*sary to ettectuate th* purposes of this Master Truat.

IV. DISTRIBUTIONS 4.01 Payment of Decommissioninq Costs. Th* Succes-sor Trustee shall make payments ot Decommissioning costs, only to the extent ot a*sets held in th* Master Trust tor such Plant to any person (including the Company) tor goods

provided or labor or other services rendered in connection with the decommissioning of the Plants only upon receipt of a Certificate.

4.02 Payment of Expenses of Administration. Upon receipt of a Certif ic~te, the Successor Trustee shall ~ake payments, only to the extent of assets held in the Mas~er Trust for such Plant, for ~dministrat~ve costs (including taxes, reasonable out-of-pocket expenses and trustees, fees) and other incidental expenses of the Master Trust (including legal, accounting and actuarial expenses) in connection with the administration of the Master Trust pursuant to this Aqreement but only to the extent that such amounts may be incurred and paid from the Qualified

• Fund(s) without causing the Qualified Fund(s) to become disqualified from the application of Section 468A of the Code or any applicable successor provisions, and only to the extent such payments ot administrative costs and other incidental expenses from the Qualified Fund(s) are not made to the Company in violation of Code sections 468A(e) or 4951 relating to self-dealing. such actministrative costs and incidental expenses shall constitute a lien on the Maater Truat until paid in full by th* Master Trust.

The Company aqr*** to pay the Trustee tor any administrative costs or incidental expenses of the Master Trust if the asaets ot the Master Trust are insutticient to pay such cost* or expenses or it for any reason the

• same are not withdrawable from the Master Trust. All such administrative costs and other incidental expenses shall be charged pro rata to the Funds (based on the fair market value of each Fund) in accordance with Section 6.04 hereof unless otherwise directed by the Company.

4.03 Fees. The Successor Trustee shall receive as exclusive compensation for its services those amounts specified in the fee schedule as may from time to time be agreed upon in writing by the successor Trustee and the company. The Company shall be obligated to pay promptly any such compensation to the extent such compensation is not paid from the Master Trust.

4.04 Liquidation of Investments. Except as

• otherwise provided in Article IX, at the direction of the Company or any Investment Manager, the successor Trustee shall sell or liquidate such investments in the Master Trust as may be requested or required in order to make any payment or distribution and shall until disbursement, restore the proceeds to the Master Trust.

V. TERMINATION.

5.01 Termination of Master Trust. This Maater Trust shall terminate upon the substantial completion of the nuclear decommisaioning of the Plants (as defined in Treasury Regulations promulgated under Code section 468A).

The company shall notify the successor Trustee in writing

of the substantial completion of the nuclear decommissioning of any Plant. Notwithstanding the foregoing, the applicable portion of a Qualified Fund shall terminate upon the earlier of:

(a) its disqualification from the application of section 468A of the Code, whether pursuant to an administrative action on the part of the Service or the decision of any court of competent jurisdiction, but in no event earlier than the date on which all available appeals have been either prosecuted or abandoned and the period of time for making any further appeals has elapsed: or (b) the disposition by the Company of any interest in a Plant, to the extent provided in Treasury Regulations promulgated under Coc:le section 468A.

5.02 Di*tribution of Master Trust or Qualified Fund(*) upon Termination. Upon termination of this Master Tru*t or a Qualified Fund, th* successor Trust** shall liquidate th* &***ts of th* Master Trust or such Qualified Fund, in accordance with written directions of th* company or an Inve*tment Manager and shall distribute the then-existing assets ot the Ma*t*r Tru*t or such Qualified Fund (including accrued, accumulated and undistributed net

income of the Master rrust or such Qualified Fund) less final Master Trust or Qualified Fund administration expenses (including compensation and reimbursable expenses of the Successor Trustee as provided in this Agreement and including accrued taxes) to the Company: provided, however, that no such distribution shall be made unless either (a) an Order by the appropriate regulatory authorities has been issued which specifically iuthorizes such distribution or (b) the Successor Trustee has received an opinion of legal counsel to the Company to the effect that no such Order is necessary to authorize such distribution.

VI. SUCCESSOR TRUSTEES.

6.01 Designation and Qualification of Successor Trustee(s). By this Agreement the Company has appointed the Successor Trustee to act as trustee to the Master Trust. At any time during the term of this Master Trust, the company shall have th* right to remove the successor Trust. . (at th* Company's discretion) acting hereunder and appoint another successor Trustee upon thirty (30) days, notice in writin9 to the Succesaor Trustee, or upon such shorter notice as may be acceptable to the successor Trustee. Any Successor Trustee shall have all the rights, powers, duties and obligations herein specified. In the event that any Succeasor Trustee shall (i) become

insolvent or admit in writing its insolvency; (ii) be unable or admit in writing its inability to pay its debts as such debts mature; (iii) make a general assignment for the benefit of creditors; (iv) have an involuntary petition in bankruptcy filed against it; (v) commence a case under or otherwise seek to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law, statute, or proceeding; or (vi) resign, the Successor Trustee shall cease to act as a fiduciary of this Master Trust and the Company shall appoint anot~er Successor Trustee within a reasonable period of time. In the event of any such removal or resignation, the successor Trustee shall have the right to have its accounts settled as provided in Section 6.05 hereof. Any successor to the Company, as provided herein, shall have the same right to remove and to appoint any Successor Trustee as provided herein.

6.02. Exoneration From Bond. No bond or other security shall be exacted or required of any Successor Truat. . appointed in any jurisdiction.

6.03 Reaignation. Any Succeasor Trustee hereof may reaiqn*and be relieved aa tru*t** at any time (without prior application to or approval by or order ot any court) by a duly acknowledged instrument, which shall be delivered to the Company by the Succe*sor Trustee not less than sixty (60) days prior to th* effective date of the

successor Trustee's resignation or upon such shorter notice as may be acceptable to the company. The foregoing sentence in no way precludes any Successor Trustee from applying for an appropriate order of any court to facilitate its resignation.

6.04 Valuation of Master Trust. The Successor Trustee shall value the Master Trust as of the close of business at the end of each year, or as may be agreed upon by the Company and the Successor Trustee (hereinafter referred to as "Valuation Dates"), and all charges and credits (between Valuation Dates) shall be considered as being made immediately after the next ensuinq valuation.

on the basis of the market valuation as of a Valuation Date, the beneficial interests of the Funds shall be adjusted to reflect the effect of income, collected and accrued, realized and unrealized qains and losses, expenses, and all other transactions durinq the period.

such valuations and adjustments shall be made so as to preserve for each Fund its beneficial interest in the Maater Truat. The successor Trustee shall maintain such record* ** are necessary to reflect th* allocation of all charq** and expen*** in accordance with this section 6.04.

6.05 Accounts and Reports. The Successor Trustee shall keep accurate and detailed accounts of all investments, receipt* and disbursements and other transactions hereunder, and all accounts, books and

records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. Within JO days following the close of each month, the Successor Trustee shall file with the Company a written report setting forth all investments, receipts and disbursements and other transactions ~ffected by it during the month and containing an exact description of all securities contributed, purchased, sold or distributed and the cost or net proceeds of sale, and showing all cash, securities and other investments held at the end of such month and the cost and fair value ot each item thereof as carried on the books of the successor Trustee. Such accounts and reports shall show the portion ot the assets applicable to each Fund and shall also identify all disbursements made to pay tor expenses ot administration of the Master Trust.

Upon the expiration ot one year (two years in the case ot exceptions raised in the tirst instance by the BPU) from th* date of the filinq of such written reports with the coapany, the successor Trustee shall be forever r*l*a*ed and diacharqed from all liability or accountability to any one with r**pect to all acts and transactions shown in such written report, except* such acts or transactions as to which the Company shall take exception by notice to the Successor Trustee within such one year period (or two year period in the case of

exceptions raised in ~he first instance by the BPU) :

provided, however, that nothing contained herein shall be deemed to relieve the Successor Trustee of any liability which may be imposed pursuant to Section 6.07 hereof. The Company shall give the Successor Trustee prompt written notice of any exception that is raised by the BPU with respect to a report filed by the successor Trustee with the Company. In the event that any exception taken by the company cannot be amicably adjusted, the Company or the Successor Trustee may file the written report in a Court having jurisdiction and upon the audit thereof any and all such exceptions which may not have been amicably settled shall be heard and adjudicated.

All records and accounts maintained by the successor Trustee with respect to the Master Trust shall be preserved tor such period as may be required under any applicable law. Upon the expiration ot any such required retention period, the Successor Trustee shall have the riqht to de*troy such records and accounts after first notityinc; th* Company in writing ot its intention and tran*t*rring to the company any records and accounts requ**ted.

6.06 Tax Returns and Other Reports. The Successor Trustee shall prepare and timely tile all Federal, state and local income or franchise tax returns or other reports (including estimated tax returns and information returns)

as may be required from time to time with respect to the Qualified Funds, and the Company agrees to provide the Successor Trustee in a timely manner with any information within its possession, and to cause the Original Trustee and the Investment Manager(s) to provide the successor Trustee with any information in its possession, which is necessary to such filings. The Successor Trustee may rely upon such information provided by the Company or an Investment Manager and shall be fully protected in so relying. The successor Trustee shall prepare and submit to the Company in a timely manner all information requested by the Company regarding the Master Trust, the*

Qualified Funds and the Nonqualif ied Funds required to be included in the Company's Federal, state and local income tax returns or other reports (including estimated tax returns and information returns). Subject to the limitations contained in Section 8.03 hereof, the Successor Truat** may employ independent certified public accountants or other tax counsel to prepare or review such return* and reporta. The Successor Trustee agrees to sign any tax return* or other report* where required by law to do ao or ariain9 out of th* succesaor Truatee's responsibiliti** hereunder, and to remit from the Master Trust appropriate payments or deposit* ot Federal, state and local income or franchise tax** directly to the taxing

~qencies or authorized depositaries in a timely manner.

• Notwithstanding Section 6.07 hereof, any interest or p~nalty charges assessed against the Master Trust or a Qualified Fund pursuant to Chapters 67 or 68 of the Code, or pursuant to any similar state or local tax provisions, as a result of the Successor Trustee's failure to comply wi~h this Section 6.06 shall be borne by the Successor Trustee and not the Master Trust or a Qualified Fund. The successor Trustee agrees to notify the Company in writing within ten days of the commencement of any audit of a Qualified Fund's Federal, state, or local tax returns, and to participate with the Company on behalf of the Qualified Fund in such audits and related inquiries. The successor Trustee further agrees to provide the Company with any additional information in its possession regarding the Qualified Funds or Nonqualif ied Funds which may be requested by the Company to be furnished in an audit of the company's Federal, state, or local tax returns.

6.07 Liability. The successor Trustee shall not be liable for any acts, omissions or defaults of the company, an Inv. .ta*nt Manager, or an agent of either the Company or an Inv**tm*nt Manager, or any agent (other than its offic*r* and employ***) or depoaitary appointed or selected by the Succ***or Trust** with reasonable care.

The succesaor Trust** shall b* liable only for such successor Trustee's own acts or omisaion* (and those of its officers and employees) occasioned by th* negligence

of such Successor Trustee (and that of its officers and employees). Except as provided in Section 6.06, the Successor Trustee shall not be liable in regard to the exercise or nonexercise of any powers and discretions properly delegated pursuant to the provisions ~f the Agreement.

The Successor Trustee may rely upon the written opinion(s) of legal counsel to the Company with respect to any question(s) arising hereunder and shall not be liable for any loss, costs, damages, or expenses (including reasonable attorneys, fees) resulting upon its acting or its refraining from acting in accordance with the advice of such counsel. The Successor Trustee 'may rely upon the written instructions of the Company, an Investment Manager, an agent of either the Company or an Investment Manager, or any person or entity appointed pursuant to Section 8.03 hereof, and the Successor Trustee shall not be liable for any losa, costs, damages, or expenses (including reaaonable attorneys, fees) resulting upon its acting or ita refraining from acting in accordance with the written directions of the Company, an Investment Manager, an agent of either the Company or an Investment Manager, or any person or entity appointed pursuant to Section 8.03 hereof. Th* succesaor Trustee may apply to any court for an appropriate order regarding the performance of its duties hereunder

• Notwithstanding anything contained in the Agreement to the contrary, the Successor Trustee may not authorize or carry out any sale, exchange or other transaction which would constitute an act of "self-dealing" within the meaning of section 4951 of the Code, as such section is made applicable to the Qualified Funds by section 468A(e) (5) of the Code, any regulations thereunder, and any applicable successor provision. If the Successor Trustee engages in an act of "self-dealing" in violation of this Agreement, the successor Trustee (and not the Qualified Fund(s)) shall be liable for any tax imposed on such Qualified Fund(s) or the successor Trustee pursuant to section 4951 of the Code (or any applicable successor provision) and for any loss or damage sustained by the Qualified Fund(s) or the Company.

6.08 Indemnity ot Successor Trustee. The Company agrees to indemnity and hold harmless the Successor Trustee, in its individual capacity and in its capacity as Trustee, trom any and all liability including any loss, costs, daaage*, excise taxes or expenses (including reasonable attorney*, tees) arising out ot this Master

• Trust and thi* Agreement excepting only such liability as may be imposed on the Successor Trustee pursuant to Section 6.07 hereof.

VII. INVESTMENTS.

7.01 Appointment of Investment Manager(s). It is contemplated that the Company will appoint one or more Investment Managers to direct the investment of all or part of the Master Trust. The appointment of an Investment Manager shall be made in accordance with any procedures specified by the Company. Whenever such appointment is made, the Company shall certify to the successor Trustee in writing that such appointment has been made, shall specify the portion of the Master Trust with respect to which an Investment Manager has been designated and shall instruct the Successor Trustee to segregate into a separate account (Investment Account) those assets with respect to which that specific Investment Manager has been designated. To the extent that the Company authorizes an Investment Manager to direct the investment of an Investment Account, the successor Tru*tee shall be released and relieved of all investment duti**, responsibilities and liabilities cuato. .rily or atatutorily incident to a trustee with re*p*ct to the Investment Account, and a* to such Inveatment Account, th* succes*or Trustee shall act as custodian. Except a* provided ;n Section 6.07 hereof, the successor Trust** shall be under no duty to question any direction ot an Investment Manager with respect to an Investment. Account, nor to review any securities or

property held in an Investment Account, nor to make !ny suggestions with respect to the investment of an Investment Account, nor to evaluate the performance of any Investment Manager and the Successor Trustee shall be fully protected in acting in accordance with the directions of an Investment Manager or for failing to act in the absence of such directions. An Investment Manager shall certify in writing to the Successor Trustee that it is qualified to act in the capacity provided under an Investment Manager Agreement, shall accept its appointment as Investment Manager, shall identify the person(s) authorized to give instructions or directions to the successor Trustee on its behalf, including specimen signatures, and shall undertake to perform the duties imposed on it under an Investment Manager Agreement. The successor Trustee may rely upon and continue to rely upon all such certifications unless otherwise notitied in writinq by the Company or an Investment Manaqer, as the case may be.

7.02 Direction by Investment Manager(s). An Investment Manaqer designated by the Company to manaqe an Investment Account shall have authority to manaqe, acquire and dispo** of the assets of the Master Trust, or a portion thereof as the case may be in accordance with the written investment guidelines established by the Company and provided to the Investment Manaqar, and the successor

-JO-Trustee shall exercise the powers set forth in Article IX hereof only when, if and in the manner directed by the Investment Manager, or in the event that no Investment Manager has been appointed, as directed by the Company in writing, and shall not otherwise be under any obligation to invest or otherwise manage any assets in the Investment Account. An Investment Manager shall have the power and authority, exercisable in its sole discretion at any time and from time to time, to issue and place orders for the purchase or sale of portfolio securities directly with qualified brokers or dealers. The Successor Trustee, upon proper notification from an Investment Manager, shall execute and deliver in accordance with the appropriate trading authorizations. Written notification of the issuance of each such authorization shall be given promptly to the Successor Trustee by an Investment Manager, and such Investment Manager shall cause the execution of such order to be confirmed in writing to the Succesaor Truatee, and to the Company, by the broker or dealer. Such notification shall be proper authority for the succeaaor Trustee to pay for portfolio securities

• purchaaed aqainat receipt thereof and to deliver portfolio securities sold against payment therefor, as the case may be. All direction* to the Succeasor Trustee by an Investment Manaqer shall be in writinq and shall be signed by a person who has been certitied by such Investment

Manager pursuant to Section 7.01 hereof as authorized to give instructions or directions to the Successor Trustee.

Should an Investment Manager at any time elect to place security transactions directly with a broker or de~ler, the Successor Trustee shall not recognize such

~ransaction unless and until it has received instructions or confirmation of such fact from an Investment Manager.

Should an Investment Manager direct the Successor Trustee to utilize the services of any person with regard to the assets under its management or control, such instructions shall be in writing and shall specifically set forth the actions to be taken by the successor Trustee as to such services. In the event that an Investment Manager places security transactions directly or directs the utilization of a service, such Investment Manager shall be solely responsible tor the acts ot such persons. The sole duty ot the succesaor Trustee as to such transactions shall be incident to its duties as custodian.

Th* authority ot an Investment Manager and the terms and condition* of the appointment and retention of such Inveataent Manager shall be th* responsibility solely of the Company, and th* successor Trustee shall not be deemed to be a party to or to have any obligation* under any agreement with an Investment Manager. Any duty ot supervision or review of the acts, omissions or overall performance ot an Investment Manager shall be the

exclusive responsibility of the Company, and the Successor Trustee shall have no duty to review any securities or other assets purchased by an Investment Manager, or to make suggestions to an Investment Manager or to the company with respect to the exercise or nonexercise of any power by an Investment Manager.

Unless the Successor Trustee knowingly participates in, or knowingly undertakes to conceal an act or omission of an Investment Manager knowing such act or omission to be a breach of the fiduciary responsibility of an Investment Manager, the successor Trustee shall be under no liability tor any loss of any kind which may result by reason ot any action taken by it in accordance with any direction of an Investment Manager, or for tailing to act in the absence of any direction of an Investment Manager.

In any event, the Successor Trustee shall be under no liability tor any los* of any kind by reason of investments purchased, sold, or retained by an Investment Manaqer, nor tor the risk or diversification of the portfolio, nor tor the turnover of the investments, nor tor any other a*pect of a portfolio for which an Investment Mana9er has been appointed.

VIII. SUCCESSOR TRUSTEE'S GENERAL POWERS.

Th* successor Trustee shall have, with respect to the Master Trust, the followin9 powers, all of which

powers are fiduciary powers to be exercised in a fiduciary capacity and in the best interests of this Master Trust and the purposes hereof, namely:

8.01 Registration of Securities. To hold any stocks, bonds, securities and/or other property of the Master Trust in the name of a nominee, in a street name, or by other title-holding device, without indication of trust and to deposit any securities or other property of the Master Trust in a depository or a clearing corporation.

a.02 Cash sweep Function. To the extent that the assets of the Mastar Trust have not been invested by an Investment Manager on any given day, to invest any uninvested assets of the Master Trust on a short-term basis, (including investments in the Successor Trustee's time deposits or short-term investment funds), subject to the limitations contained in Article IX hereof, and in accordance with any written quidelines provided to the Trustee by the Company.

8.03 Retention and Removal ot Professional and Employ. . Service*. To employ accountants, custodians, enqineera, contractors, clerks, and aqents, as directed in writinq by the Company as necessary to carry out the purposes ot this Master Trust and to employ attorneys for the Master Trust, upon prior notitication to the Company.

8.04 Delegation of Ministerial Powers. T~ delegate to other persons such ministerial powers and duties as the successor Trustee may deem to be advisable.

8.05 Powers of Successor Trustee to Continue Until Final Distribution. To exercise any of such powers after the date on which the principal and income of the Master Trust shall have become distributable and until such time as the entire principal of, and income from, the Master Trust shall have been actually distributed by the Successor Trustee. It is intended that distribution of the Master Trust will occur as soon as possible upon termination of the Master Trust, subject, however, to the limitations contained in Article V hereof.

• a.06 Discretion in Exercise of Powers. To do any and all other acts to effectuate the powers specifically conferred upon it by this Aqreement, provided, however, that th* Succ*asor Truste* may not do any act or participate in any transaction which it knew would:

(a) Disqualify a Qualified Fund from the application of section 468A (or any applicabl* succ*ssor provision) of the Code; or (b) Contraven* any provision of this Aqre*m*nt.

IX. SUCCESSOR TRUSTEE'S INVESTMENT POWERS.

The Successor Trustee recognizes the authority of an Investment Manager to manage, invest and reinvest the assets in an Investment Ac:ount pursuant to an Investment Management Agreement and as provided in Article VII of this Agreement, the Successor Trustee agrees to cooperate with any Investment Manager as deemed necessary to accomplish these tasks. Notwithstanding the foregoing, to the extent that the assets of the Master Trust have not been allocated to an Investment Account under the investment control ot an Investment Manager, upon the written direction ot the Company, the Successor Trustee shall have the following investment powers, all of which are fiduciary powers to be executed in a fiduciary capacity and in the best interest ot this Master Trust and the purposes hereof, and which are to be exercised as the successor Trustee, acting in such fiduciary capacity, in its discretion, shall determine and, except as otherwise provided, which are intended in no way to limit the powers ot th* office, namely:

9.01 Preservation ot Principal. To hold, manage and inv**t th* a***t* ot this Master Trust in a manner designed to maximize and preserve the income and principal ot this Master Trust tor th* purposes ot this Master Trust, except as provided in Sections 9.02 and 9.03

• 9.02 Investment of Master Trust. To invest and reinvest all or any part of the Master Trust, including any undistributed income therefrom, provided, however, that no such investment or reinvestment of the assets of the Qualified Funds may be made by the Successor Trustee:

(a) unless such investment is identified in Code section 50l(c) (21) (B) (ii); or (b) in any bank, savings and loan association or other financial institution whose deposits are not insured by the Federal Deposit Insurance Corporation, the Federal savings &

Loan Insurance Corporation, or other comparable federal or state agency; or (c) which would contravene any instructions issued by the Company.

In all cases, however, the total investments by the Successor Trust** must be sufficiently liquid or short-term in nature (a* provided in guidelines to the Successor Trustee from the Company) so as to enable the Master Trust to fulf 111 the purpose* of this Master Trust and to satisfy obligation* and contemplated payments from the Master Trust a* such obligations and payments become due.

Nothing in thi* Section 9.02 shall be construed as authorizing the Succ***or Trustee to carry on any business or to divide the gains therefrom.

9.03 Pooled Investments. To pool the assets of the Funds for investment in accordance with Section 9.02 hereof, and to maintain such records as are necessary to reflect the allocation of income or losses between the Funds in accordance with Sec~ion 6.04 hereof.

9.04 Management of Master Trust. To sell, exchange, partition or otherwise dispose of all or any part of the Master Trust at public or private sale, without prior application to or approval by or order of any court, upon such terms and in such manner and at such prices as the successor Trustee shall determine; to modify, renew or extend mortgages, bonds, notes or other obligations or any installment of principal thereof or any interest due thereon and to waive any defaults in the performance of the terms and conditions thereof; to adjust, settle, compromise and arbitrate claims or demands in favor of or against the Master Trust, including claims for taxes, upon such terms as the Successor Trustee may deem advisable; and to execute and deliver any and all bills of sale, as*icpiaenta, bond* or other instruments in connection with th*** _powers, all at such times, in such manner and upon such term* and condition* as the successor Trustee may deem expedient to accomplish the purpose* of this Master Trust as set forth in section 2.01 hereof.

9.05 Borrowing. To borrow money in such amounts and upon such terms as th* Company may direct in writing as

• necessary to carry out the purposes of this Master Trust, and to pledge any securities or other property for the repayment of any such loan as the Company may direct.

X. MISCELLANEOUS 10.01 Headings. The section headings set forth in this Agreement and the Table of Contents are inserted for convenience of reference only and shall be disregarded in the construction or interpretation of any of the

~revisions of this Agreement.

10.02 Particular Words. Any word contained in the text of this Agreement shall be read as the singular or plural and as the masculine, feminine or neuter as may be applicable or permissible in the particular context.

Unless otherwise specitically stated, the word "person" shall be taken to mean and include an individual, partnership, association, trust, company or corporation.

10.03 Severability of Provisions. If any provision of this Aqreement or its application to any person or entity or in any circumstances shall be invalid and unenforceable, the application of such provision to person* and in circumstances other than those as to which it is invalid or unenforceable and the other provisions of this Aqreement, shall not be affected by such invalidity or unenforceability.

• 10.04 Form and Content of Communications. The name of any person authorized to act on behalf of the Company or to execute a Certificate shall be certified, with the specimen signature of such person, to t~e Successor Trustee by the Company. Until appropriate written evidence to the contrary is received by the Successor Trustee, it shall be fully protected in relying upon and acting in accordance with any written notice, instruction, direction, certificate, resolution or other communication believed by it to be genuine and to be signed and/or certified by any proper person, and the successor Trustee shall be under no duty to make any investigation or inquiry as to the truth or accuracy of any statement contained therein. Until notified in writing to the contrary, the Successor Trustee shall have the right to assume that there has been no change in the identity or authority of any person previously certified to it hereunder.

10.05 Delivery of Notices Under Agreement. Any notice required by this Agreement to be given to the company or the successor Trustee shall be deemed to have been properly qiven when received, provided the notice is mailed, postage prepaid, by registered or certified mail, to the person to be notified as set forth below:

If to the Company:

• PUBLIC SERVICE ELECTRIC AND GAS COMPANY 80 Park Plaza Newark, New Jersey 07101 Attention: Francis J. Riepl Vice President and Treasurer If to the Successor Trustee:

THE CHASE MANHATTAN BANK, N.A.

1211 Avenue of the Americas New York, New York 10036 Attention: Edward s. Mollahan Pension Trust Officer The company and the successor Trustee may change the addresses above by delivering notice thereof in writing to the other party.

10.06 Alterations and Amendments. The Successor Trustee and the Company understand and agree that

• modifications or amendments may be required to this Agreement from time to time to effectuate the purpose of this Master Trust and to comply with any Order, any changes in tax laws, requlations or rulings (whether published or private) of the Service and any similar state taxing authority, and any other changes in the laws applicable to th* Company or th* Plants. The successor Tru*t** and the Company may alter or amend this Agreement

.to th* extent nec***ary or advisable to effectuate such purpo***, to comply with such Order or changes, or for any other reason; provided however, that no amendment which affects the rights, duties, or responsibilities of either party to this Agreement may be made without the consent of

• both parties to this Agreement. Any amendment shall

• become effective only upon receipt by the Company and the successor Trustee of the instrument of acendment.

10.07 Successors and Assigns. Subject to the provisions of Sections 2.09 and 6.01, this Agreement shall be binding upon and inure to the benefit of the Company, the Successor Trustee and their respective successors, assigns, personal representatives, executors and heirs.

10.08 Governing Jurisdiction. This Master Trust and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of the State ct New York to the extent not superseded by Federal law.

10.09 Accounting Year. The Master Trust shall operate on an accounting year which coincides with the calendar year, January l through December 31.

IN WITNESS WHEREOF, the Company and the successor Trustee have set their hands and seals to this Agreement as ct the day and year tirst above written.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY Vice

-4:-

• THE CHASE MANHATTAN BANK, N.A.

By ~~~~-;-;:;~---:=-:-~,-~1~-~-:--~~~~~~~~

e Pre~~nt -,

Attest: ~... J_~~,i,~~

• STATE OF MEW JERSEY COUNTY OF ESSEX ss:

I, /)'} /) .<:, 1 f _ ~ /'"!G r1, '{_ , a Notary Public in and for the aforesaid ju.risdi~tion, do hereby certify that Francis J. Riepl and &.J 5: << '- / .v ...1 J ~ , who are personally known to be the persons who executed the foregoing Master Decommissioning Trust Agreement, personally appeared before me in the aforesaid jurisdiction, and as Vice President and Treasurer and Assistant Secretary of Public Service Electric and Gas Company, and by virtue of the power and authority vested in them, acknowledged the same to be the act and deed of Public Service Electric and Gas Company, and they executed the same as such.

Given under my hand and seal this ~3 day of January, 1989.

(NOTARIAL SEAL]

• STATE OF NEW YORK COUNTY OF NEW YORK ss:

I, '~ltf' / )~d-111' , a Notary Public in and for the aforesaid jurisdiction, do hereby certify that

/ ;;Jt_p1£l , and /!,Y,!tf f"tft/"(,*,~* . -,.a.t;~'

who are personally known to me to be the persons who executed the foregoing Master Decommissioning Trust Agreement, personally appeared before me in the aforesaid jurisdiction, and as Vice President and Assistant Treasurer of The Chase Manhattan Bank, N.A., and by virtue of the power and authority vested in them, acknowledged the same to be the act and deed of The Chase Manhattan Bank, N.A., and they executed the same as such.

Given under my hand and seal this IJ!I day of ;:$~Y J'aR\iapY, 19 8 9 *

[HOTARIAL SEAL]

Not~Pul:llic/,~ New York My commission expires &,/3{1!,'l .

• CERTIFICATE Exhibit A The undersigned Authorized Representative of Public Service Electric and Gas Company, a New Jersey corporation (the company), being duly authorized and empowered to execute and deliver this Certificate, hereby certifies to the Successor Trustee of the Public Service Electric and Gas Company Master Decommissioning Trust (Master Trust),

pursuant to Article IV of the Amended Master Decommissioning Trust Agreement, dated as of January 3, 1989 (Agreement), between the Successor Trustee and the Company as follows:

(l) there is due and owing to each payee listed in Exhibit l hereto (Payees) (all/a portion of] the invoiced cost to the Company for:

(a) goods or services provided in connection with decommissioning th* Plant, or (b) administrative costs of the Master Trust (excluding coats arising from th* Company's furniahing of good*, services, or facilities to the Maater Trust and excluding coapenaation which is excessive or unnecesaary to carry out th* purposes of the Maater Trust) aa*evidenced by the Invoice Schedule (with supporting exbibita) attached aa Exhibit l hereto; (2) all auch amount* due and owing to th* Payees constitute Decommiaaioning Coats or Administrative Expense* a* described in Article IV of th* Agreement; and (3) all condition* precedent to th* making of this withdrawal and disbursement set forth in any agreement between such Payees and th* Company have been fulfilled.

Accordingly, the Successor Trustee is hereby authorized and directed to withdraw $ from the

[Hope Creek/Peach Bottom Two/Peach Bottom Three/Salem one/Salem Two] [Qualified Fund/Nonqualified Fund] [Fund(s) s~ecified in Exhibit l] in order to permit payment of such sum to be made to the Payees. The Successor Trustee is further directed to disburse such sum, once withdrawn, directly to such Payees in the following manner:

[DESCRIBE: CHECK, WIRE TRANSFER, ETC.] on or before

~~~' 19~*

WITNESS my hand this ~~ day of ~~' 19 PUBLIC SERVICE ELECTRIC AND GAS COMPANY By Authorized Representative

calculatiai of NRC Fl.ind:ing Requirements in Year 1990 PSr.&G Is Share Remaining Years of Funding* to Eld of NRC Annual Operating License Requirenent in Operating License Flmding Statiai and Unit Expiratiai Date Year 1990 Life Requirement

('lmlsands (Years) ('lbol.lsands of Ibllars) of Ibllars)

}kJpe Creek Unit No. 1 April 11, 2026 $165,169 36 $4,588 Salem Unit No. 1 August 13, 2016 $60,505 26 $2,327 Salem Unit rt>. 2 April 18, 2020 $60,505 30 $2,017 Peach Bottail thit No. 2 January 31, 2008 $73,874 18 $4,104 Peach Bottan Unit No. 3 Januaey 31, 2008 $73,874 18 $4,104

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