ML20311A457

2017 Q1-Q4 ROP Inspection Findings

ML20311A457
Person / Time
Site:	Palo Verde
Issue date:	11/06/2017
From:	Office of Nuclear Reactor Regulation
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Download: ML20311A457 (527)

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[[:#Wiki_filter:1Q/2000 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending

1Q/2000 Inspection Findings - Palo Verde 3 Page 2 of 4 The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf)

1Q/2000 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

1Q/2000 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : April 01, 2002

2Q/2000 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified

2Q/2000 Inspection Findings - Palo Verde 3 Page 2 of 4 condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf)

2Q/2000 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

2Q/2000 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : April 01, 2002

3Q/2000 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000.

3Q/2000 Inspection Findings - Palo Verde 3 Page 2 of 4 This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf)

3Q/2000 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

3Q/2000 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 29, 2002

4Q/2000 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000.

4Q/2000 Inspection Findings - Palo Verde 3 Page 2 of 4 This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf)

4Q/2000 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

4Q/2000 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 28, 2002

1Q/2001 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Mitigating Systems Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a

1Q/2001 Inspection Findings - Palo Verde 3 Page 2 of 4 non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf)

1Q/2001 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

1Q/2001 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 28, 2002

2Q/2001 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a

2Q/2001 Inspection Findings - Palo Verde 3 Page 2 of 4 non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf)

2Q/2001 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

2Q/2001 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 27, 2002

3Q/2001 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a

3Q/2001 Inspection Findings - Palo Verde 3 Page 2 of 4 non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf)

3Q/2001 Inspection Findings - Palo Verde 3 Page 3 of 4 Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in

3Q/2001 Inspection Findings - Palo Verde 3 Page 4 of 4 an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 26, 2002

4Q/2001 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf)

4Q/2001 Inspection Findings - Palo Verde 3 Page 2 of 4 Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be

4Q/2001 Inspection Findings - Palo Verde 3 Page 3 of 4 plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely

4Q/2001 Inspection Findings - Palo Verde 3 Page 4 of 4 manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : March 01, 2002

1Q/2002 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding

1Q/2002 Inspection Findings - Palo Verde 3 Page 2 of 4 Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was

1Q/2002 Inspection Findings - Palo Verde 3 Page 3 of 4 entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Mar 23, 2002 Identified By: Licensee Item Type: NCV NonCited Violation Failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area Green. Technical Specification 5.7.1.b states, in part, that any individual or group of individuals permitted to enter a high radiation area shall be provided with a radiation monitoring device that continuously integrates the radiation dose rate in an area. On October 14, 2001, the licensee identified that between October 9 and October 11, 2001, eight individuals used a non-functioning electronic dosimeter and entered high radiation areas. The cause of the electronic dosimeter problem was a vendor related firmware problem. The failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area is a violation of Technical Specification 5.7.1. These events are described in the licensee's corrective action program, reference Condition Report/ Disposition Request CRDR 2432485. These events are being treated as a Non-Cited Violation. The safety significance of this finding was determined to be very low (Green) by the Occupational Radiation Safety Significance Determination Process because having a nonfunctioning radiation monitoring device has a credible impact on worker safety, the occurrence involved personnel dosimetry related to measuring worker dose, and there was no overexposure or unintended dose as a result of this nonfunctioning dosimeter. Inspection Report# : 2002002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's

1Q/2002 Inspection Findings - Palo Verde 3 Page 4 of 4 corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Mar 19, 2002 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems. The licensee was generally effective at identifying problems and placing them into the corrective action program. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. The licensee effectively prioritized and evaluated issues with few exceptions. One exception involved a final operability evaluation which concluded that the main steam and feedwater isolation system actuation circuitry was operable took approximately 5 months to complete. Another example involved a failure to fully determine the extent of a condition associated with Borg-Warner check valve failures which resulted in additional failures. Corrective actions, when specified, were implemented in a timely manner. Based on interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Section 4OA2). Inspection Report# : 2002005(pdf) Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : July 22, 2002

2Q/2002 Inspection Findings - Palo Verde 3 Page 1 of 6 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

2Q/2002 Inspection Findings - Palo Verde 3 Page 2 of 6 Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

2Q/2002 Inspection Findings - Palo Verde 3 Page 3 of 6 detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

2Q/2002 Inspection Findings - Palo Verde 3 Page 4 of 6 the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf) Emergency Preparedness Occupational Radiation Safety Significance: Mar 23, 2002 Identified By: Licensee Item Type: NCV NonCited Violation Failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area Green. Technical Specification 5.7.1.b states, in part, that any individual or group of individuals permitted to enter a high radiation area shall be provided with a radiation monitoring device that continuously integrates the radiation dose rate in an area. On October 14, 2001, the licensee identified that between October 9 and October 11, 2001, eight individuals used a non-functioning electronic dosimeter and entered high radiation areas. The cause of the electronic dosimeter problem was a vendor related firmware problem. The failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area is a violation of Technical Specification 5.7.1. These events are described in the licensee's corrective action program, reference Condition Report/ Disposition Request CRDR 2432485. These events are being treated as a Non-Cited Violation. The safety significance of this finding was determined to be very low (Green) by the Occupational Radiation Safety Significance Determination Process because having a nonfunctioning radiation monitoring device has a credible impact on worker safety, the occurrence involved personnel dosimetry related to measuring worker dose, and there was no overexposure or unintended dose as a result of this nonfunctioning dosimeter. Inspection Report# : 2002002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

2Q/2002 Inspection Findings - Palo Verde 3 Page 5 of 6 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Mar 19, 2002 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems. The licensee was generally effective at identifying problems and placing them into the corrective action program. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. The licensee effectively prioritized and evaluated issues with few exceptions. One exception involved a final operability evaluation which concluded that the main steam and feedwater isolation system actuation circuitry was operable took approximately 5 months to complete. Another example involved a failure to fully determine the extent of a condition associated with Borg-Warner check valve failures which resulted in additional failures. Corrective actions, when specified, were implemented in a timely manner. Based on interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Section 4OA2). Inspection Report# : 2002005(pdf) Significance: N/A Feb 22, 2001 Identified By: NRC file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

2Q/2002 Inspection Findings - Palo Verde 3 Page 6 of 6 Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : August 29, 2002 file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/03/2003

3Q/2002 Inspection Findings - Palo Verde 3 Page 1 of 7 Palo Verde 3 Initiating Events Significance: May 19, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Failure to discontinue a reactor startup when required by procedure TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 2.b of this Regulatory Guide includes instructions for reactor plant startup. Procedure 40OP-9ZZ03, "Reactor Startup," Revision 2, provides instructions for monitoring anticipated critical position during a reactor startup. On May 19, 2001, this procedure was implemented to conduct a reactor startup of Unit 3. Due to personnel error, the reactor startup was allowed to continue after two consecutive anticipated critical positions indicated that the Unit 3 reactor would go critical below the (-)500 pcm position as described in CRDR 2391526. This finding is of very low safety significance because criticality did not occur below TS limits. Inspection Report# : 2001003(pdf) Significance: Feb 26, 2001 Identified By: Self Disclosing Item Type: NCV NonCited Violation Inadequate surveillance test procedure causes inadvertent reactor coolant system partial drain while shutdown TS 5.4, "Procedures," requires that written procedures be implemented and maintained covering the applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 8.b.(1)(j) of this Regulatory Guide includes procedures to perform surveillance testing of the Emergency Core Cooling System. However, Procedure 73ST-9SI06, "Containment Spray Pumps and Check Valves - Insevice Test," Revision 9, which gives instructions for performing the CS pump surveillance test, was not adequately maintained. On February 26, 2001, performance of the steps as written resulted in water being inadvertently transferred from the Unit 3 reactor coolant system to the refueling water tank, while the unit was in Mode 5. The violation was of very low safety significance (Green) because operators had multiple methods and sufficient time to stop the inventory loss before the point where a loss of suction on safety injection pumps could occur. This violation is in the licensee's corrective action program as CRDR 2365447 and is being treated as an NCV. Inspection Report# : 2001002(pdf) Mitigating Systems Significance: Oct 29, 2001 Identified By: Licensee Item Type: NCV NonCited Violation Mode 3 Entry with an auxiliary feedwater pump inoperable Technical Specification 3.0.4 requires, in part, that when a limiting condition for operation is not met, entry into a Mode or other specified condition in the Applicability shall not be made except when the associated actions to be entered permit continued operation in the Mode or other specified condition in the Applicability for an unlimited period of time. Technical Specification 3.7.5 requires that three auxiliary feedwater trains be operable in Modes 1, 2, and 3. Contrary to these requirements, on October 29 and November 2, 2001, [Unit 3] control room operators entered Mode 3

3Q/2002 Inspection Findings - Palo Verde 3 Page 2 of 7 with the steam driven auxiliary feedwater pump inoperable (NCV 50-530/01-006-02). At the time, steam supply Valves 3JSGAUV134 and 3JSGAUV0138 were deenergized and closed under permit 59885 to be in compliance with TS 3.6.3 Action C.1. pending inservice valve testing. This issue is identified in the licensee's corrective action program as CRDR 2438386. This finding is of very low safety significance because it only affects the mitigating systems cornerstone and two other operable auxiliary feedwater trains were available. Inspection Report# : 2001006(pdf) Significance: Mar 31, 2001 Identified By: NRC Item Type: FIN Finding Anomalies in testing and test results for essential cooling water heat exchangers leads to ineffective trending The inspector identified that the licensee was not effectively trending essential cooling water heat exchanger thermal performance. Ineffective heat exchanger performance trending could allow thermal performance to degrade below design bases limits without detection, which is a credible impact on safety. The essential cooling water system is a mitigating system. The finding was of very low safety significance, because the actual cumulative effect of these errors was less than the available thermal performance margin and in all cases, the heat exchangers remained operable. Inspection Report# : 2001002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to promptly identify and correct an inadequate HPSI system venting procedure A non-cited violation was identified when the licensee failed to promptly identify and correct an inadequate surveillance procedure that was used to periodically vent the high pressure safety injection (HPSI) system. The procedure failed to include guidance for conducting HPSI system venting and the acceptance criteria to ensure successful venting. This failure resulted inadequate HPSI system venting since February 1997. This was a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI. This violation was entered into the licensee's corrective action program as CRDR 2316659. The underlying technical issue, an inadequate surveillance procedure, was assessed by the significance determination process and determined to have very low safety significance because the high pressure safety injection system remained operable. Inspection Report# : 2001004(pdf) Significance: Jan 10, 2001 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure and Operator Failure To Follow Procedure Results in Spent Fuel Pool Overfill Green. The inspectors determined that Procedure 40OP-9PC05, "Augmentation of Fuel Pool Cooling with Shutdown Cooling," Revision 13, was inadequate. On December 8, 2000, in Unit 3, this procedure was in use and did not provide guidance to isolate the suction of the spent fuel pool cooling pumps from the refueling water storage tank during the alignment of containment spray Pump B for spent fuel pool cooling. This resulted in transfer of 27,000 gallons of borated water from the refueling water tank to the spent fuel pool. Of this, 1,200 gallons spilled into the fuel building. The inspectors also determined that control room operators did not perform Procedure 40OP-9PC05, Step 7.3.14, which required an operator be posted to monitor spent fuel pool level during the evolution. This resulted in delayed detection of the incorrect lineup that caused the spent fuel pool overfill. The failure to maintain and implement a Regulatory Guide 1.33, Appendix A, recommended procedure for operation of the spent fuel pool cooling system, was a non-cited violation of Technical Specification 5.4. This non-cited violation was determined to have very low safety significance because the refueling water tank level did not drop below the Technical Specification required level during the event. (Section 1R14). Inspection Report# : 2000011(pdf) Significance: N/A Aug 28, 2000

3Q/2002 Inspection Findings - Palo Verde 3 Page 3 of 7 Identified By: NRC Item Type: FIN Finding Supplemental inspection to address a change in performance indicated by the Unit 3 high pressure safety injection system performance unavailability indicator (White) This supplemental inspection was performed by the NRC to address a change in performance indicated by the high pressure safety injection system performance unavailability indicator. This change was primarily due to the inoperability of high pressure safety injection system Train B Valve 3JSIBUV636, between January 6 and March 28, 2000. This performance issue was self-revealing during the performance of Surveillance Procedure 73ST-9XI14, "Train B HPSI Injection and Miscellaneous SI Valves - Inservice Test." The valve failed during the surveillance test as a result of oxidation on electrical contacts. The licensee identified the root cause as the lack of a preventive maintenance task for inspecting electrical contacts in control circuits. Due to the licensee's acceptable performance in addressing this issue, white performance associated with the unavailability of high pressure safety injection system Train B will only be considered in assessing plant performance for a total of four quarters in accordance with the guidance in IMC 0305, "Operating Reactor Assessment Program." Inspection Report# : 2000012(pdf) Significance: Apr 22, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Emergency diesel generator fuel oil line failure due to a failure to follow a maintenance procedure On October 3, 1998, maintenance personnel failed to follow work order instructions for torqueing fuel supply lines on the Unit 3 "A" Emergency Diesel Generator. As a result, a fuel supply line detached from a cylinder on the diesel generator during a load test conducted on April 22, 2000. This failure to follow a work order is a violation of Technical Specification 5.4.1. [This violation was entered into the licensee's corrective action program as CRDR 117562. This finding was determined to have a very low risk significance because the redundant Unit 3 "B" Emergency Diesel Generator was operable and the faulted emergency diesel generator was capable of supplying its associated loads for 17 hours which was sufficient to mitigate a loss of offsite power event.] Inspection Report# : 2001004(pdf) Barrier Integrity Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Violation of Technical Specification 5.5.9.4.a.6 that requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. Technical Specification 5.5.9.4.a.6 requires steam generator tubes that have a wall thickness of less than 40 percent of the original tube wall to be plugged. During the October 1998 eddy current tube inspection of Steam Generator 3-2, the licensee failed to identify a tube defect that exceeded the Technical Specification limit for a through-wall defect of 40 percent. The defect was subsequently identified during the next tube inspection that was performed in April 2000 and corrected. The steam generator tube was operated in violation of Technical Specification 5.5.9.4.a.6 for an entire cycle. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 117497. This condition was reported in LER 50-530/1998-006-00. This event did not approach or challenge the tube burst limit during the cycle that it was operated in an unplugged condition. Based on this fact, the risk significance of this issue was characterized as very low (Green) consistent with the significance determination process. Inspection Report# : 2000010(pdf)

3Q/2002 Inspection Findings - Palo Verde 3 Page 4 of 7 Emergency Preparedness Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. Off-hours exercises are only conducted once every 6 years, and off-hours quarterly pager and autodialer tests conducted over the past year were only functional tests that did not establish response times to the emergency facilities. Failure to adequately test the ability to meet minimum emergency response facility staffing response times during off-hours is a violation of 10 CFR 50.54(q), which requires that a licensee follow their emergency plans. Section 8.1.3, "Drills," of the Emergency Plan states that drills for the emergency organization are conducted periodically throughout the year to test response timing and emergency equipment and to ensure members of the Emergency Response Organization are familiar with their duties. Section 5.1.2.2 of Emergency Plan Implementing Procedure 08 requires that quarterly pager and autodialer testing be conducted to demonstrate minimum staffing response capability for the emergency facilities. Minimum staffing is defined in Table 1 of the Emergency Plan and includes positions and response times during normal and off-hours for each emergency facility. Contrary to the above, drills for the emergency response organization have not tested off-hours response timing periodically throughout the year. The last off-hours facility activation drill was conducted in 1999, and off-hours pager and autodialer tests conducted each quarter did not demonstrate response timing. The finding was determined to be a performance deficiency associated with emergency response organization augmentation testing. The finding was evaluated to be more than minor using the Emergency Preparedness Significance Determination Process because it affects the emergency preparedness cornerstone objective in that inadequate testing of the augmentation function can fail to identify problems in staffing the emergency facilities in a timely manner. The finding was evaluated as having very low safety significance (Green), since it was a failure of a regulatory requirement but not a failure to meet an emergency planning standard. This finding is in the licensee's corrective action process as Condition Report/Disposition Request 2532635 and is being treated as a noncited violation (50-528/02-04-01; 50-529/02-04-01; 50-530/02-04-01) in accordance with Section VI.A of the NRC Enforcement Policy (Section 1EP3). Inspection Report# : 2002004(pdf) Occupational Radiation Safety Significance: Mar 23, 2002 Identified By: Licensee Item Type: NCV NonCited Violation Failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area Green. Technical Specification 5.7.1.b states, in part, that any individual or group of individuals permitted to enter a high radiation area shall be provided with a radiation monitoring device that continuously integrates the radiation dose rate in an area. On October 14, 2001, the licensee identified that between October 9 and October 11, 2001, eight individuals used a non-functioning electronic dosimeter and entered high radiation areas. The cause of the electronic dosimeter problem was a vendor related firmware problem. The failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area is a violation of Technical Specification 5.7.1. These events are described in the licensee's corrective action program, reference Condition Report/ Disposition Request CRDR 2432485. These events are being treated as a Non-Cited Violation. The safety significance of this finding was

3Q/2002 Inspection Findings - Palo Verde 3 Page 5 of 7 determined to be very low (Green) by the Occupational Radiation Safety Significance Determination Process because having a nonfunctioning radiation monitoring device has a credible impact on worker safety, the occurrence involved personnel dosimetry related to measuring worker dose, and there was no overexposure or unintended dose as a result of this nonfunctioning dosimeter. Inspection Report# : 2002002(pdf) Significance: Feb 22, 2001 Identified By: NRC Item Type: NCV NonCited Violation Failure to conduct adequate radiation surveys Three examples of a failure to conduct adequate radiological surveys. On December 21, 1999, radiological surveys failed to detect changing radiological conditions at the "B" concentrate monitor tank. On May 4, 2000, radiological surveys failed to detect changing radiological conditions at the "B" LPSI pump cyclone separator and changing radiological conditions following a drain down of the spent fuel transfer canal. As a result, radiological area postings and controls for these areas were inappropriate. These three examples of inadequate radiological surveys were a violation of 10 CFR Part 20.1501. This violation was entered into the licensee's corrective action program as CRDRs 113251, 117874 and 117970. These findings were determined to have very low risk significance because there was no overexposure or substantial potential for an overexposure and the ability to assess radiation doses was not compromised. Inspection Report# : 2001004(pdf) Public Radiation Safety Physical Protection Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a portion of a document as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a portion of a document as containing Safeguards information. On September 18, 2001, pursuant to 10 CFR 50.90, the licensee submitted to NRC Headquarters a change to its physical security plan. A portion (page) of this plan change included the size (number) of the armed response force used to defend all three units at Palo Verde and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the size (number) of responding security forces be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee withdrew all copies of this physical security plan change. The failure to conspicuously mark a portion of a document as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2433526, this finding is being treated as a noncited violation (50-528/02-04-02; 50-529/02-04-02; 50-530/02-04-02) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf)

3Q/2002 Inspection Findings - Palo Verde 3 Page 6 of 7 Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a drawing as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a drawing as containing Safeguards information. On June 27, 2002, the licensee maintained Drawing TY-GL-002 (sheet 1 of 1), which contained an overview block diagram of the Palo Verde new North Access Facility and the new Independent Spent Fuel Storage Installation (ISFSI) and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the site-specific drawings that substantially represent the final design features of the physical protection system be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee ensured that all copies of the drawing were properly marked. The failure to conspicuously mark the drawing as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2533054, this finding is being treated as a noncited violation (50-528/02-04-03; 50-529/02-04-03; 50-530/02-04-03) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) Significance: Nov 29, 2000 Identified By: Licensee Item Type: NCV NonCited Violation Failure to properly secure safeguards information. 10 CFR 73.21(d)(2) states that, while safeguards information is unattended, the information shall be stored in a locked security storage container. Procedure 20DP-OSK43, Revision 4, paragraph 3.8.3, states that, while unattended, materials containing safeguards information shall be stored in an approved, locked safeguards storage container. Contrary to the above requirements, on July 28, 2000, the licensee left a safeguards safe unlocked outside the protected area. This condition was identified by the licensee and corrective actions were specified in Condition Report/Disposition Request 2308078. This condition was reported in LER 50-528;-529;-530/2000-S01-00. This issue was determined to be of very low safety significance (Green) by the significance determination process because there were not greater than two similar findings in the last four quarters. Inspection Report# : 2000010(pdf) Miscellaneous Significance: N/A Mar 19, 2002 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems. The licensee was generally effective at identifying problems and placing them into the corrective action program. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. The licensee effectively prioritized and evaluated issues with few exceptions. One exception involved a final operability evaluation which concluded that the main steam and feedwater isolation system actuation circuitry was operable took approximately 5 months to complete. Another example involved a failure to fully determine the extent of a condition associated with Borg-Warner check valve failures which resulted

3Q/2002 Inspection Findings - Palo Verde 3 Page 7 of 7 in additional failures. Corrective actions, when specified, were implemented in a timely manner. Based on interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Section 4OA2). Inspection Report# : 2002005(pdf) Significance: N/A Feb 22, 2001 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems was effective The licensee was effective at identifying problems and putting them into the corrective action program. The licensee's effectiveness at problem identification was evidenced by the relatively few deficiencies identified by external organizations (including the NRC) that had not been previously identified by the licensee during the review period. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. Corrective actions, when specified, were generally implemented in a timely manner. However, there was one instance that is discussed below, where the licensee did not promptly identify and correct an inadequate procedure. Licensee audits and assessments were effective. Based on the interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Sections 4OA2.1b;2b;3b;4b). Inspection Report# : 2001004(pdf) Last modified : December 02, 2002

4Q/2002 Inspection Findings - Palo Verde 3 Page 1 of 3 Palo Verde 3 Initiating Events Mitigating Systems Barrier Integrity Significance: Oct 15, 2002 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure Used During Loss of Letdown Event IR 05000528-02-06, IR 05000529-02-06, IR 05000530-02-06, on 9/22/02 - 12/28/02, Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; personnel performance during nonroutine evolutions and event followup. A noncited violation of 10 CFR 50.59 and Technical Specification 5.4.1(a) was identified for failing to perform a required safety evaluation and for inappropriately revising Procedure 40AO-9ZZ05, "Loss of Letdown," Revision 9, in February 1996. Procedure 40AO-9ZZ05 was revised to direct operators to allow charging to increase pressurizer level from 55 percent to 70 percent based on a calculation that assumed the plant was tripped. As a result, the procedure was inadequate for operation at 100 percent power in that the procedure directed operators to allow charging to increase pressurizer level above the Technical Specification limit on pressurizer level in MODES 1, 2, and 3 of 56 percent. When the procedure was used at 100 percent power on October 15, 2002, the probability or likelihood of malfunction of the pressurizer safety valves, equipment previously evaluated in the safety analysis report, increased. The violation was of more than minor safety significance because the inadequate procedure placed the plant in a condition that increased the likelihood that a loss of heat removal accident would cause reactor coolant to pass through the pressurizer safety valves thus causing damage to these valves. The finding is of very low safety significance because of the short duration of the condition and availability of mitigating system components. This violation is being treated as a noncited violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2560477 and 2580246 (Section 1R14). Inspection Report# : 2002006(pdf) Emergency Preparedness Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. Off-hours exercises are only conducted once every 6 years, and off-hours quarterly pager and autodialer tests conducted over the past year were only functional tests that did not establish response times to the emergency facilities. Failure to adequately test the ability to meet minimum emergency response facility staffing response times during off-hours is a violation of 10 CFR 50.54(q), which requires that a licensee follow their emergency plans. Section 8.1.3, "Drills," of the Emergency Plan states that drills for the emergency organization are conducted periodically throughout the year to test response timing and emergency equipment and to ensure members of the Emergency Response Organization are familiar with their duties. Section 5.1.2.2 of Emergency Plan Implementing Procedure 08 requires that quarterly pager and autodialer testing be conducted to demonstrate minimum staffing response capability for the emergency facilities. Minimum staffing is defined in Table 1 of the Emergency Plan and includes positions and response times during normal and off-hours for each emergency facility. Contrary to the above, drills for the emergency response organization have not tested off-hours response timing periodically throughout the year. The last off-hours facility activation drill was conducted in 1999, and off-hours pager and autodialer tests conducted each quarter did not demonstrate response timing. The finding was determined to be a performance deficiency

4Q/2002 Inspection Findings - Palo Verde 3 Page 2 of 3 associated with emergency response organization augmentation testing. The finding was evaluated to be more than minor using the Emergency Preparedness Significance Determination Process because it affects the emergency preparedness cornerstone objective in that inadequate testing of the augmentation function can fail to identify problems in staffing the emergency facilities in a timely manner. The finding was evaluated as having very low safety significance (Green), since it was a failure of a regulatory requirement but not a failure to meet an emergency planning standard. This finding is in the licensee's corrective action process as Condition Report/Disposition Request 2532635 and is being treated as a noncited violation (50-528/02-04-01; 50-529/02-04-01; 50-530/02-04-01) in accordance with Section VI.A of the NRC Enforcement Policy (Section 1EP3). Inspection Report# : 2002004(pdf) Occupational Radiation Safety Significance: Mar 23, 2002 Identified By: Licensee Item Type: NCV NonCited Violation Failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area Green. Technical Specification 5.7.1.b states, in part, that any individual or group of individuals permitted to enter a high radiation area shall be provided with a radiation monitoring device that continuously integrates the radiation dose rate in an area. On October 14, 2001, the licensee identified that between October 9 and October 11, 2001, eight individuals used a non-functioning electronic dosimeter and entered high radiation areas. The cause of the electronic dosimeter problem was a vendor related firmware problem. The failure to wear a radiation monitoring device that continuously integrated the radiation dose rate in a high radiation area is a violation of Technical Specification 5.7.1. These events are described in the licensee's corrective action program, reference Condition Report/ Disposition Request CRDR 2432485. These events are being treated as a Non-Cited Violation. The safety significance of this finding was determined to be very low (Green) by the Occupational Radiation Safety Significance Determination Process because having a nonfunctioning radiation monitoring device has a credible impact on worker safety, the occurrence involved personnel dosimetry related to measuring worker dose, and there was no overexposure or unintended dose as a result of this nonfunctioning dosimeter. Inspection Report# : 2002002(pdf) Public Radiation Safety Physical Protection Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a portion of a document as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a portion of a document as containing Safeguards information. On September 18, 2001, pursuant to 10 CFR 50.90, the licensee submitted to NRC Headquarters a change to its physical security plan. A portion (page) of this plan change included the size (number) of the armed response force used to defend all three units at Palo Verde and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the size (number) of responding security forces be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee withdrew all copies of this physical security plan change. The failure to conspicuously mark a portion of a document as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2433526, this finding is being treated as a noncited violation (50-528/02-04-02; 50-529/02-04-02; 50-530/02-04-02) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf)

4Q/2002 Inspection Findings - Palo Verde 3 Page 3 of 3 Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a drawing as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a drawing as containing Safeguards information. On June 27, 2002, the licensee maintained Drawing TY-GL-002 (sheet 1 of 1), which contained an overview block diagram of the Palo Verde new North Access Facility and the new Independent Spent Fuel Storage Installation (ISFSI) and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the site-specific drawings that substantially represent the final design features of the physical protection system be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee ensured that all copies of the drawing were properly marked. The failure to conspicuously mark the drawing as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2533054, this finding is being treated as a noncited violation (50-528/02-04-03; 50-529/02-04-03; 50-530/02-04-03) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) Miscellaneous Significance: N/A Mar 19, 2002 Identified By: NRC Item Type: FIN Finding Identification and resolution of problems. The licensee was generally effective at identifying problems and placing them into the corrective action program. The licensee effectively used risk information in prioritizing the extent of evaluation of individual problems and the schedule for implementation of corrective actions. The licensee effectively prioritized and evaluated issues with few exceptions. One exception involved a final operability evaluation which concluded that the main steam and feedwater isolation system actuation circuitry was operable took approximately 5 months to complete. Another example involved a failure to fully determine the extent of a condition associated with Borg-Warner check valve failures which resulted in additional failures. Corrective actions, when specified, were implemented in a timely manner. Based on interviews conducted during this inspection, workers at the site felt free to input safety issues into the problem identification and resolution program (Section 4OA2). Inspection Report# : 2002005(pdf) Last modified : March 25, 2003

1Q/2003 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 1Q/2003 Plant Inspection Findings Initiating Events Mitigating Systems Barrier Integrity Significance: Oct 15, 2002 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure Used During Loss of Letdown Event IR 05000528-02-06, IR 05000529-02-06, IR 05000530-02-06, on 9/22/02 - 12/28/02, Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; personnel performance during nonroutine evolutions and event followup. A noncited violation of 10 CFR 50.59 and Technical Specification 5.4.1(a) was identified for failing to perform a required safety evaluation and for inappropriately revising Procedure 40AO-9ZZ05, "Loss of Letdown," Revision 9, in February 1996. Procedure 40AO-9ZZ05 was revised to direct operators to allow charging to increase pressurizer level from 55 percent to 70 percent based on a calculation that assumed the plant was tripped. As a result, the procedure was inadequate for operation at 100 percent power in that the procedure directed operators to allow charging to increase pressurizer level above the Technical Specification limit on pressurizer level in MODES 1, 2, and 3 of 56 percent. When the procedure was used at 100 percent power on October 15, 2002, the probability or likelihood of malfunction of the pressurizer safety valves, equipment previously evaluated in the safety analysis report, increased. The violation was of more than minor safety significance because the inadequate procedure placed the plant in a condition that increased the likelihood that a loss of heat removal accident would cause reactor coolant to pass through the pressurizer safety valves thus causing damage to these valves. The finding is of very low safety significance because of the short duration of the condition and availability of mitigating system components. This violation is being treated as a noncited violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2560477 and 2580246 (Section 1R14). Inspection Report# : 2002006(pdf) Emergency Preparedness Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/22/2003

1Q/2003 Inspection Findings - Palo Verde 3 Page 2 of 4 Failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. Off-hours exercises are only conducted once every 6 years, and off-hours quarterly pager and autodialer tests conducted over the past year were only functional tests that did not establish response times to the emergency facilities. Failure to adequately test the ability to meet minimum emergency response facility staffing response times during off-hours is a violation of 10 CFR 50.54(q), which requires that a licensee follow their emergency plans. Section 8.1.3, "Drills," of the Emergency Plan states that drills for the emergency organization are conducted periodically throughout the year to test response timing and emergency equipment and to ensure members of the Emergency Response Organization are familiar with their duties. Section 5.1.2.2 of Emergency Plan Implementing Procedure 08 requires that quarterly pager and autodialer testing be conducted to demonstrate minimum staffing response capability for the emergency facilities. Minimum staffing is defined in Table 1 of the Emergency Plan and includes positions and response times during normal and off-hours for each emergency facility. Contrary to the above, drills for the emergency response organization have not tested off-hours response timing periodically throughout the year. The last off-hours facility activation drill was conducted in 1999, and off-hours pager and autodialer tests conducted each quarter did not demonstrate response timing. The finding was determined to be a performance deficiency associated with emergency response organization augmentation testing. The finding was evaluated to be more than minor using the Emergency Preparedness Significance Determination Process because it affects the emergency preparedness cornerstone objective in that inadequate testing of the augmentation function can fail to identify problems in staffing the emergency facilities in a timely manner. The finding was evaluated as having very low safety significance (Green), since it was a failure of a regulatory requirement but not a failure to meet an emergency planning standard. This finding is in the licensee's corrective action process as Condition Report/Disposition Request 2532635 and is being treated as a noncited violation (50-528/02-04-01; 50-529/02-04-01; 50-530/02-04-01) in accordance with Section VI.A of the NRC Enforcement Policy (Section 1EP3). Inspection Report# : 2002004(pdf) Occupational Radiation Safety Public Radiation Safety Significance: Mar 06, 2003 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT THE RELEASE OF DETECTABLE AMOUNTS OF LICENSED RADIOACTIVE MATERIAL IR 05000528-03-08, IR 05000529-03-08, IR 05000530-03-08, on 2/24/03 - 3/06/30; Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Radioactive Material Control; Radiation Safety Team Inspection. Green. The team identified three examples (one NRC identified and two self-revealing) of a noncited violation of Technical Specification 5.4.1.a because the licensee failed to follow procedural requirements. Specifically, the licensee failed to prevent detectable amounts of licensed radioactive material from being unconditionally released from the radiologically controlled area, as required by Procedure 75RP-9RP09, Revision 21, Section 3.2. file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/22/2003

1Q/2003 Inspection Findings - Palo Verde 3 Page 3 of 4 Unconditionally releasing equipment from the radiologically controlled area with detectable radioactivity was a performance deficiency. The finding was more than minor because it was associated with the cornerstone attribute (material release) and it affected the associated cornerstone objective (to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain). The finding involved an occurrence in the radiological material control program that was contrary to licensee procedures. When processed through the Public Safety Significance Determination Process, the finding was found to have very low safety significance because the finding was a radioactive material control issue, was not a transportation issue, public exposure was not greater than 5 millirem, and there were less than five occurrences. Inspection Report# : 2003008(pdf) Physical Protection Significance: N/A Jan 17, 2003 Identified By: NRC Item Type: FIN Finding Verification of compliance with Interim Compensatory Measures Order On February 25, 2002, the NRC imposed by Order, Interim Compensatory Measures to enhance physical security. The inspectors determined that, overall, the licensee appropriately incorporated the Interim Compensatory Measures into the site protective strategy and access authorization program; developed and implemented relevant procedures; ensured that the emergency plan could be implemented; and established and effectively coordinated interface agreements with offsite organizations. Inspection Report# : 2003006(pdf) Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a portion of a document as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a portion of a document as containing Safeguards information. On September 18, 2001, pursuant to 10 CFR 50.90, the licensee submitted to NRC Headquarters a change to its physical security plan. A portion (page) of this plan change included the size (number) of the armed response force used to defend all three units at Palo Verde and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the size (number) of responding security forces be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee withdrew all copies of this physical security plan change. The failure to conspicuously mark a portion of a document as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2433526, this finding is being treated as a noncited violation (50-528/02-04-02; 50-529/02-04-02; 50-530/02-04-02) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/22/2003

1Q/2003 Inspection Findings - Palo Verde 3 Page 4 of 4 Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a drawing as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a drawing as containing Safeguards information. On June 27, 2002, the licensee maintained Drawing TY-GL-002 (sheet 1 of 1), which contained an overview block diagram of the Palo Verde new North Access Facility and the new Independent Spent Fuel Storage Installation (ISFSI) and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the site-specific drawings that substantially represent the final design features of the physical protection system be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee ensured that all copies of the drawing were properly marked. The failure to conspicuously mark the drawing as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2533054, this finding is being treated as a noncited violation (50-528/02-04-03; 50-529/02-04-03; 50-530/02-04-03) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) Miscellaneous Last modified : May 30, 2003 file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 07/22/2003

2Q/2003 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 2Q/2003 Plant Inspection Findings Initiating Events Mitigating Systems Barrier Integrity Significance: Oct 15, 2002 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure Used During Loss of Letdown Event IR 05000528-02-06, IR 05000529-02-06, IR 05000530-02-06, on 9/22/02 - 12/28/02, Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; personnel performance during nonroutine evolutions and event followup. A noncited violation of 10 CFR 50.59 and Technical Specification 5.4.1(a) was identified for failing to perform a required safety evaluation and for inappropriately revising Procedure 40AO-9ZZ05, "Loss of Letdown," Revision 9, in February 1996. Procedure 40AO-9ZZ05 was revised to direct operators to allow charging to increase pressurizer level from 55 percent to 70 percent based on a calculation that assumed the plant was tripped. As a result, the procedure was inadequate for operation at 100 percent power in that the procedure directed operators to allow charging to increase pressurizer level above the Technical Specification limit on pressurizer level in MODES 1, 2, and 3 of 56 percent. When the procedure was used at 100 percent power on October 15, 2002, the probability or likelihood of malfunction of the pressurizer safety valves, equipment previously evaluated in the safety analysis report, increased. The violation was of more than minor safety significance because the inadequate procedure placed the plant in a condition that increased the likelihood that a loss of heat removal accident would cause reactor coolant to pass through the pressurizer safety valves thus causing damage to these valves. The finding is of very low safety significance because of the short duration of the condition and availability of mitigating system components. This violation is being treated as a noncited violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2560477 and 2580246 (Section 1R14). Inspection Report# : 2002006(pdf) Emergency Preparedness Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 10/08/2003

2Q/2003 Inspection Findings - Palo Verde 3 Page 2 of 4 Failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to periodically test the ability to meet minimum emergency response facility staffing response times during off-hours. Off-hours exercises are only conducted once every 6 years, and off-hours quarterly pager and autodialer tests conducted over the past year were only functional tests that did not establish response times to the emergency facilities. Failure to adequately test the ability to meet minimum emergency response facility staffing response times during off-hours is a violation of 10 CFR 50.54(q), which requires that a licensee follow their emergency plans. Section 8.1.3, "Drills," of the Emergency Plan states that drills for the emergency organization are conducted periodically throughout the year to test response timing and emergency equipment and to ensure members of the Emergency Response Organization are familiar with their duties. Section 5.1.2.2 of Emergency Plan Implementing Procedure 08 requires that quarterly pager and autodialer testing be conducted to demonstrate minimum staffing response capability for the emergency facilities. Minimum staffing is defined in Table 1 of the Emergency Plan and includes positions and response times during normal and off-hours for each emergency facility. Contrary to the above, drills for the emergency response organization have not tested off-hours response timing periodically throughout the year. The last off-hours facility activation drill was conducted in 1999, and off-hours pager and autodialer tests conducted each quarter did not demonstrate response timing. The finding was determined to be a performance deficiency associated with emergency response organization augmentation testing. The finding was evaluated to be more than minor using the Emergency Preparedness Significance Determination Process because it affects the emergency preparedness cornerstone objective in that inadequate testing of the augmentation function can fail to identify problems in staffing the emergency facilities in a timely manner. The finding was evaluated as having very low safety significance (Green), since it was a failure of a regulatory requirement but not a failure to meet an emergency planning standard. This finding is in the licensee's corrective action process as Condition Report/Disposition Request 2532635 and is being treated as a noncited violation (50-528/02-04-01; 50-529/02-04-01; 50-530/02-04-01) in accordance with Section VI.A of the NRC Enforcement Policy (Section 1EP3). Inspection Report# : 2002004(pdf) Occupational Radiation Safety Public Radiation Safety Significance: Mar 06, 2003 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT THE RELEASE OF DETECTABLE AMOUNTS OF LICENSED RADIOACTIVE MATERIAL IR 05000528-03-08, IR 05000529-03-08, IR 05000530-03-08, on 2/24/03 - 3/06/30; Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Radioactive Material Control; Radiation Safety Team Inspection. The team identified three examples (one NRC identified and two self-revealing) of a noncited violation of Technical Specification 5.4.1.a because the licensee failed to follow procedural requirements. Specifically, the licensee failed to prevent detectable amounts of licensed radioactive material from being unconditionally released from the radiologically controlled area, as required by Procedure 75RP-9RP09, Revision 21, Section 3.2. Unconditionally file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 10/08/2003

2Q/2003 Inspection Findings - Palo Verde 3 Page 3 of 4 releasing equipment from the radiologically controlled area with detectable radioactivity was a performance deficiency. The finding was more than minor because it was associated with the cornerstone attribute (material release) and it affected the associated cornerstone objective (to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain). The finding involved an occurrence in the radiological material control program that was contrary to licensee procedures. When processed through the Public Safety Significance Determination Process, the finding was found to have very low safety significance because the finding was a radioactive material control issue, was not a transportation issue, public exposure was not greater than 5 millirem, and there were less than five occurrences. Inspection Report# : 2003008(pdf) Physical Protection Significance: N/A Jan 17, 2003 Identified By: NRC Item Type: FIN Finding Verification of compliance with Interim Compensatory Measures Order On February 25, 2002, the NRC imposed by Order, Interim Compensatory Measures to enhance physical security. The inspectors determined that, overall, the licensee appropriately incorporated the Interim Compensatory Measures into the site protective strategy and access authorization program; developed and implemented relevant procedures; ensured that the emergency plan could be implemented; and established and effectively coordinated interface agreements with offsite organizations. Inspection Report# : 2003006(pdf) Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a portion of a document as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a portion of a document as containing Safeguards information. On September 18, 2001, pursuant to 10 CFR 50.90, the licensee submitted to NRC Headquarters a change to its physical security plan. A portion (page) of this plan change included the size (number) of the armed response force used to defend all three units at Palo Verde and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the size (number) of responding security forces be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee withdrew all copies of this physical security plan change. The failure to conspicuously mark a portion of a document as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2433526, this finding is being treated as a noncited violation (50-528/02-04-02; 50-529/02-04-02; 50-530/02-04-02) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 10/08/2003

2Q/2003 Inspection Findings - Palo Verde 3 Page 4 of 4 Significance: Sep 26, 2002 Identified By: NRC Item Type: NCV NonCited Violation Failure to mark a drawing as containing Safeguards information. IR 05000528-02-04, IR 05000529-02-04, IR 05000530-02-04, IR 72-44/02-02; Arizona Public Service Company; 6/23/02 - 9/21/02; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Emergency Response Organization Augmentation Testing and Access Control. A noncited violation of very low safety significance was identified for failure to mark a drawing as containing Safeguards information. On June 27, 2002, the licensee maintained Drawing TY-GL-002 (sheet 1 of 1), which contained an overview block diagram of the Palo Verde new North Access Facility and the new Independent Spent Fuel Storage Installation (ISFSI) and was not marked as containing "Safeguards Information." 10 CFR 73.21 requires, in part, that information regarding the site-specific drawings that substantially represent the final design features of the physical protection system be marked "Safeguards Information" in a conspicuous manner to indicate the presence of protected information. Following identification of this issue, the licensee ensured that all copies of the drawing were properly marked. The failure to conspicuously mark the drawing as "Safeguards Information" was determined to be a performance deficiency. The finding was evaluated to be more than minor because it affects a physical protection cornerstone objective and if left uncorrected it would become a more significant safety concern. Using the Physical Protection Significance Determination Process, the inspector determined the violation had very low safety significance because there were not more than two similar findings in four calendar quarters. Because of the very low safety significance (Green) and because the licensee included the finding in their corrective action program as Condition Report/Disposition Request 2533054, this finding is being treated as a noncited violation (50-528/02-04-03; 50-529/02-04-03; 50-530/02-04-03) in accordance with Section VI.A of the NRC Enforcement Policy (Section 3PP2). Inspection Report# : 2002004(pdf) Miscellaneous Last modified : September 04, 2003 file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 10/08/2003

3Q/2003 Inspection Findings - Palo Verde 3 Page 1 of 3 Palo Verde 3 3Q/2003 Plant Inspection Findings Initiating Events Mitigating Systems Barrier Integrity Significance: Oct 15, 2002 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedure Used During Loss of Letdown Event IR 05000528-02-06, IR 05000529-02-06, IR 05000530-02-06, on 9/22/02 - 12/28/02, Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; personnel performance during nonroutine evolutions and event followup. A noncited violation of 10 CFR 50.59 and Technical Specification 5.4.1(a) was identified for failing to perform a required safety evaluation and for inappropriately revising Procedure 40AO-9ZZ05, "Loss of Letdown," Revision 9, in February 1996. Procedure 40AO-9ZZ05 was revised to direct operators to allow charging to increase pressurizer level from 55 percent to 70 percent based on a calculation that assumed the plant was tripped. As a result, the procedure was inadequate for operation at 100 percent power in that the procedure directed operators to allow charging to increase pressurizer level above the Technical Specification limit on pressurizer level in MODES 1, 2, and 3 of 56 percent. When the procedure was used at 100 percent power on October 15, 2002, the probability or likelihood of malfunction of the pressurizer safety valves, equipment previously evaluated in the safety analysis report, increased. The violation was of more than minor safety significance because the inadequate procedure placed the plant in a condition that increased the likelihood that a loss of heat removal accident would cause reactor coolant to pass through the pressurizer safety valves thus causing damage to these valves. The finding is of very low safety significance because of the short duration of the condition and availability of mitigating system components. This violation is being treated as a noncited violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2560477 and 2580246 (Section 1R14). Inspection Report# : 2002006(pdf) file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 01/12/2004

3Q/2003 Inspection Findings - Palo Verde 3 Page 2 of 3 Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Significance: Mar 06, 2003 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT THE RELEASE OF DETECTABLE AMOUNTS OF LICENSED RADIOACTIVE MATERIAL IR 05000528-03-08, IR 05000529-03-08, IR 05000530-03-08, on 2/24/03 - 3/06/30; Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Radioactive Material Control; Radiation Safety Team Inspection. The team identified three examples (one NRC identified and two self-revealing) of a noncited violation of Technical Specification 5.4.1.a because the licensee failed to follow procedural requirements. Specifically, the licensee failed to prevent detectable amounts of licensed radioactive material from being unconditionally released from the radiologically controlled area, as required by Procedure 75RP-9RP09, Revision 21, Section 3.2. Unconditionally releasing equipment from the radiologically controlled area with detectable radioactivity was a performance deficiency. The finding was more than minor because it was associated with the cornerstone attribute (material release) and it affected the associated cornerstone objective (to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain). The finding involved an occurrence in the radiological material control program that was contrary to licensee procedures. When processed through the Public Safety Significance Determination Process, the finding was found to have very low safety significance because the finding was a radioactive material control issue, was not a transportation issue, public exposure was not greater than 5 millirem, and there were less than five occurrences. Inspection Report# : 2003008(pdf) Physical Protection Significance: N/A Jan 17, 2003 Identified By: NRC Item Type: FIN Finding Verification of compliance with Interim Compensatory Measures Order On February 25, 2002, the NRC imposed by Order, Interim Compensatory Measures to enhance physical security. The inspectors determined that, overall, the licensee appropriately incorporated the Interim Compensatory Measures into the site protective strategy and access authorization program; developed and implemented relevant procedures; ensured that the emergency plan could be implemented; and established and effectively coordinated interface agreements with offsite organizations. file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 01/12/2004

3Q/2003 Inspection Findings - Palo Verde 3 Page 3 of 3 Inspection Report# : 2003006(pdf) Miscellaneous Last modified : December 01, 2003 file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 01/12/2004

4Q/2003 Inspection Findings - Palo Verde 3 Page 1 of 2 Palo Verde 3 4Q/2003 Plant Inspection Findings Initiating Events Mitigating Systems Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Significance: Mar 06, 2003 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT THE RELEASE OF DETECTABLE AMOUNTS OF LICENSED RADIOACTIVE MATERIAL IR 05000528-03-08, IR 05000529-03-08, IR 05000530-03-08, on 2/24/03 - 3/06/30; Arizona Public Service Company; Palo Verde Nuclear Generating Station, Units 1, 2, and 3; Radioactive Material Control; Radiation Safety Team Inspection. The team identified three examples (one NRC identified and two self-revealing) of a noncited violation of Technical Specification 5.4.1.a because the licensee failed to follow procedural requirements. Specifically, the licensee failed to prevent detectable amounts of licensed radioactive material from being unconditionally released from the radiologically controlled area, as required by Procedure 75RP-9RP09, Revision 21, Section 3.2. Unconditionally releasing equipment from the radiologically controlled area with detectable radioactivity was a performance deficiency. The finding was more than minor because it was associated with the cornerstone attribute (material release) and it affected the associated cornerstone objective (to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain). The finding involved an occurrence file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 04/22/2004

4Q/2003 Inspection Findings - Palo Verde 3 Page 2 of 2 in the radiological material control program that was contrary to licensee procedures. When processed through the Public Safety Significance Determination Process, the finding was found to have very low safety significance because the finding was a radioactive material control issue, was not a transportation issue, public exposure was not greater than 5 millirem, and there were less than five occurrences. Inspection Report# : 2003008(pdf) Physical Protection Significance: N/A Jan 17, 2003 Identified By: NRC Item Type: FIN Finding Verification of compliance with Interim Compensatory Measures Order On February 25, 2002, the NRC imposed by Order, Interim Compensatory Measures to enhance physical security. The inspectors determined that, overall, the licensee appropriately incorporated the Interim Compensatory Measures into the site protective strategy and access authorization program; developed and implemented relevant procedures; ensured that the emergency plan could be implemented; and established and effectively coordinated interface agreements with offsite organizations. Inspection Report# : 2003006(pdf) Miscellaneous Last modified : March 02, 2004 file://C:\RROP\NRR\OVERSIGHT\ASSESS\PALO3\palo3_pim.html 04/22/2004

1Q/2004 Inspection Findings - Palo Verde 3 Page 1 of 1 Palo Verde 3 1Q/2004 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2003 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Surveillance Requirement 3.5.3.8 Green. The inspectors identified a noncited violation for the licensee's failure to implement Surveillance Requirement 3.5.3.8 for all three units. The licensee failed to identify and remove debris in Trains A and B emergency core cooling system sumps during their last performance of Procedure 31ST-SI01, "Cleaning/Inspection of ECCS Sumps," Revision 7. Specifically, the licensee failed to identify unqualified tie-wraps that were attached to the stem of the containment sump suction valves inside the emergency core cooling system sumps. This finding is greater than minor, since it affected the mitigating system cornerstone objective of equipment reliability because the debris could have affected containment spray pump flow by clogging spray nozzles. The finding is of very low safety significance because the amount of debris would have only degraded containment spray pump flow during a potential large break loss of coolant accident, but the safety function would have been fulfilled based on the small amount of debris. Inspection Report# : 2003005(pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection Miscellaneous Last modified : May 05, 2004 07/14/2004

2Q/2004 Inspection Findings - Palo Verde 3 Page 1 of 4 Palo Verde 3 2Q/2004 Plant Inspection Findings Initiating Events Significance: Jun 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation SPENT FUEL POOL WATER SIPHON DUE TO CHECK VALVE FAILURE A self-revealing noncited violation of Technical Specification 4.3.2 was identified for the failure to properly maintain a check valve (siphon breaker) between the vacuum drying skid and the spent fuel pool, such that, the spent fuel pool could not be inadvertently drained below 137 feet 6 inches. On May 14, 2004, the check valve failed to open and caused an inadvertent siphoning of approximately 20 gallons from the Unit 3 spent fuel pool to the cask washdown pit. Had the draindown continued, the spent fuel pool level could have decreased below 137 feet 6 inches. This issue was entered into the corrective action program as CRDR 2709518. The finding is greater than minor because it affected the configuration control attribute of the initiating events cornerstone. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT LOSS OF SPENT FUEL POOL INVENTORY EVENTS THROUGH TIMELY CORRECTIVE ACTIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to identify the root cause of spent fuel pool inventory loss events and implement corrective actions to preclude recurrence. Specifically, the improper positioning of a fuel pool cleanup suction valve and inadequate level monitoring resulted in three losses of spent fuel pool inventory events. This finding involves problem identification and resolution cross-cutting aspects associated with the failure to identify root causes and implement corrective actions. The issue also involved human performance cross-cutting aspects associated with mispositioned valves and awareness of plant conditions by operations personnel. This issue was entered into the corrective action program as CRDR 2599869. The finding is greater than minor because it affected the configuration control and human performance attributes of the initiating events cornerstone objective. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Mitigating Systems Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM A COMPLETE SHUT DOWN COOLING HEAT EXCHANGER TEMPERATURE LOOP CHANNEL CALIBRATION A Severity Level IV noncited violation of Technical Specification 3.3.11 was identified for the failure to include the resistance temperature detectors in the channel calibration for the shutdown cooling heat exchanger temperature instruments. Specifically, prior to the implementation of Improved Technical Specifications, the licensee did not perform testing of the resistance temperature detectors. Following the implementation of Improved Technical Specifications, the licensee did not perform an in-place qualitative assessment of the resistance temperature detectors' behavior. This issue was entered into the corrective action program as CRDR 280178. The failure to perform a complete shutdown cooling heat exchanger temperature loop channel calibration is determined to have greater than minor significance because the licensee's failure to report the condition impacted the NRC's ability to perform it's regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of

2Q/2004 Inspection Findings - Palo Verde 3 Page 2 of 4 violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because it only affected the mitigating system cornerstone and the resistance temperature detectors were found to be within calibration. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM MONTHLY REVIEWS TO ENSURE EXCESS HOURS HAVE NOT BEEN ASSIGNED The inspectors identified a noncited violation of Technical Specification 5.2.2.d for the failure of authorized individuals to review monthly overtime reports to ensure that excessive hours have not been assigned. Specifically, following the implementation of an electronic reporting system in 2001, the licensee did not ensure that all managers continued to receive and approve the Excess Hours Report. The finding is greater than minor because if left uncorrected it could become a more significant safety concern in that exceeding the NRC Generic Letter 82-02, "Nuclear Power Plant Staff Working Hours," guidelines for overtime limits is a contributor to worker fatigue. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because there were no known actual adverse plant or equipment conditions that could be attributed to worker fatigue. Inspection Report# : 2004003(pdf) Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADATION OF POLYETHYLENE CHANNELS ON CLASS 1E BATTERIES Green. The inspectors identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions. Specifically, the licensee did not identify the degradation of polyethylene insulating channels on Class 1E station batteries. Missing insulating channels could affect the seismic qualification of the batteries. This finding is greater than minor because it affects the reactor safety mitigating system cornerstone objective to ensure the capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, the finding was determined to have a very low safety significance, since there was no case where enough insulating channels had slipped to affect the seismic analyses, and the batteries remained in their design configuration. Inspection Report# : 2004002(pdf) Significance: Dec 31, 2003 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Surveillance Requirement 3.5.3.8 Green. The inspectors identified a noncited violation for the licensee's failure to implement Surveillance Requirement 3.5.3.8 for all three units. The licensee failed to identify and remove debris in Trains A and B emergency core cooling system sumps during their last performance of Procedure 31ST-SI01, "Cleaning/Inspection of ECCS Sumps," Revision 7. Specifically, the licensee failed to identify unqualified tie-wraps that were attached to the stem of the containment sump suction valves inside the emergency core cooling system sumps. This finding is greater than minor, since it affected the mitigating system cornerstone objective of equipment reliability because the debris could have affected containment spray pump flow by clogging spray nozzles. The finding is of very low safety significance because the amount of debris would have only degraded containment spray pump flow during a potential large break loss of coolant accident, but the safety function would have been fulfilled based on the small amount of debris. Inspection Report# : 2003005(pdf) Barrier Integrity Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation CONTAINMENT PURGE PENETRATION NONCONFORMANCE A Severity Level IV noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a nonconforming condition in a timely manner. Specifically, since June 2001, the licensee discontinued implementation of required Technical Specification surveillance testing for the containment purge valves by declaring the valves inoperable and installing blind flanges. This issue was entered into the corrective action program as CRDR 2711167.

2Q/2004 Inspection Findings - Palo Verde 3 Page 3 of 4 The finding is greater than minor because the licensee's failure to submit a license amendment to correct the nonconforming condition impacted the NRC's ability to perform its regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone and the installation of blind flanges adequately maintained containment integrity. Inspection Report# : 2004003(pdf) Significance: SL-IV May 21, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROVIDE AN EVALUATION OF A CHANGE TO THE FACILITY AS DESCRIBED IN THE UFSAR, UNDER 10 CFR 50.59 REQUIREMENTS The team identified a Severity Level IV violation of 10 CFR 50.59 requirements for failing to evaluate a modification to spent fuel storage in the spent fuel pools. The team reviewed CRDR 2524176, regarding the lack of a criticality analysis to support the use of rod capture tubes, which hold individual harvested fuel pins, in the spent fuel rack. The team reviewed the licensee's process of storing individual fuel pins, removed from a parent fuel assembly, and placed in rod capture tubes to be located in guide tubes of another host assembly. This resulted in a component that had nuclear fuel pins, of varying enrichment and depletion, stored as a regular fuel assembly in the spent fuel pools. The team noted that Section 9.1 of the UFSAR specifically described the storage of spent fuel in regions based upon fuel assembly initial enrichment, actual burnup, and actual decay time. The UFSAR does not describe the storage of individual pins in these regions. The licensee previously interpreted this as meaning the UFSAR did not prohibit such storage, and would not require consideration of enrichment, burnup, and decay of individual pins. The licensee failed to provide an evaluation of a change to the facility as described in the UFSAR, under 10 CFR 50.59 requirements. The licensee subsequently performed an evaluation of the criticality under station procedure 72DP-9NF01, "Control of SNM Transfer and Inventory," which was found acceptable. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the barrier integrity cornerstone attribute of human performance, and could have represented a more significant issue if left uncorrected. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The team leader and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the barrier integrity function. The licensee entered this issue into its corrective action program as CRDR 2711241. Inspection Report# : 2004006(pdf) Emergency Preparedness Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation IMPLEMENTATION OF A CHANGE TO TABLE 1 WHICH WAS A DECREASE IN EFFECTIVENESS OF THE EMERGENCY PLAN Green. On February 16, 2003, and February 4, 2004, the licensee implemented an emergency plan change, which decreased the required number of onshift emergency responders. This change constituted a decrease in effectiveness of the emergency plan because it could have resulted in a dedicated onshift communicator being replaced by a shift technical advisor, with a loss of one onshift position. Implementation of changes to the emergency plan, which constitute a reduction in the effectiveness of the plan without prior NRC approval, was a noncited violation of 10 CFR 50.54(q). The finding was evaluated using NUREG-1600, "General Statement of Policy and Procedure for NRC Enforcement Actions," Section IV, because licensee reductions in the effectiveness of its emergency plan impact the regulatory process. The finding had greater than minor significance because reducing the required number of onshift emergency responders had the potential to impact the ability to perform all necessary emergency functions. The finding was determined to be a noncited Severity Level IV violation because the emergency plan change constituted a failure to implement a regulatory requirement, but did not constitute a failure to meet an emergency planning standard as defined by 10 CFR 50.47(b) because actual staffing levels remained above the emergency plan minimum. This finding has been entered into the licensee's corrective action program as Condition Report Disposition Request 2670023. Inspection Report# : 2004002(pdf) Occupational Radiation Safety

2Q/2004 Inspection Findings - Palo Verde 3 Page 4 of 4 Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Significance: N/A May 21, 2004 Identified By: NRC Item Type: FIN Finding IDENTIFICATION AND RESOLUTION OF PROBLEMS The team concluded that the licensee was generally effective at identifying problems and processing them through the corrective action program. The licensee effectively prioritized and evaluated issues with a few exceptions. The team identified examples where the licensee had not evaluated identified issues for proper compliance with 10 CFR 50.59 requirements. Additionally, in some cases, corrective actions were not timely or fully documented. Licensee audits and assessments were found to be effective except for one example involving maintenance rule application to radiation monitors. On the basis of interviews conducted during this inspection, workers at the site felt free to input safety findings into the corrective action program. Inspection Report# : 2004006(pdf) Last modified : September 08, 2004

3Q/2004 Inspection Findings - Palo Verde 3 Page 1 of 8 Palo Verde 3 3Q/2004 Plant Inspection Findings Initiating Events Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO REMOVE PIPE SUPPORT LEADS TO RCS PRESSURE BOUNDARY LEAK Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for the failure to implement a modification. The modification should have removed a pipe support associated with a high pressure safety injection system drain line. The failure to remove the pipe support, combined with high vibrations, resulted in a reactor coolant system pressure boundary leak from a cracked socket weld upstream of high pressure safety injection header drain Valve 1-P-SIA-V056. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2669474. The finding is greater than minor since it is associated with the equipment performance and design control attributes of the initiating events cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because assuming worst case degradation, the leak would not have exceeded the Technical Specification limit for identified reactor coolant system leakage and mitigating systems were not affected. Inspection Report# : 2004004(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURS FOR OPERATION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with a failure to operate the spent fuel handling machine in accordance with Procedure 78OP-9FX03, "Spent Fuel Handling Machine," Revision 16. There were three instances of this: (1) On October 4, 2002, the spent fuel handling machine operator moved fuel assemblies of two differing weights and was not cognizant of design differences of the fuel assemblies and did not stop fuel movement when the load was greater than 50 lbs. different from expected; (2) On October 4, 2002, the spent fuel handling machine operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly, and (3) later on October 4, 2002, another spent fuel handling operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly. In both Examples (2) and (3), the operators failed to verify the "UP LIMIT" light was on and failed to verify the hoist indicator was at the "UPLIMIT." As a result, in Example (3), the one fuel assembly was damaged. These issues were contrary to Procedure 78OP-9FX03 and resulted in damage to the lower grid assembly of Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products to the environment. The finding is of very low safety significance because all mitigation systems were available during the fuel movement operations and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of human performance. Inspection Report# : 2004011(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PRESCRIBE ADEQUATE INSTRUCTIONS FOR ENTRY INTO ABNORMAL OPERATING PROCEDURE, PVNGS PROCEDURE 40AO-9ZZ22, "FUEL DAMAGE," REVISION 2 THROUGH 6 The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with an inadequate abnormal operating procedure. Specifically, the inspectors determined that Palo Verde Nuclear Generating Station Procedure 40AO-9ZZ22, "Fuel Damage," Revisions 1 through 6, were not adequate in that the entry conditions never required operations personnel to enter the procedure and take actions to mitigate the event. Step 1.1 states, in part, "Section 3.0, Irradiated Fuel Damage may be entered when any of the following conditions exist . . . when equipment or component failures result in any of the following: irradiated fuel assembly contacting a solid structure; bubbles emerging from a spent fuel assembly; bent, twisted, or warped spent fuel assembly; or visual damage to spent fuel pin cladding." Since this abnormal operating procedure was never entered, applicable actions were never considered during the Fuel Assembly P1M316 event. This finding is greater than minor because actions taken in response to fuel handling errors could result in significant fuel cladding damage and

3Q/2004 Inspection Findings - Palo Verde 3 Page 2 of 8 effect the barrier cornerstone. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: TBD Aug 30, 2004 Identified By: NRC Item Type: AV Apparent Violation FAILURE TO PROPERLY INFORM PLANT MANAGEMENT FOLLOWING FUEL HANDLING EVENT The inspectors identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI. Specifically, the licensee established measures to assure that conditions adverse to quality are promptly identified and corrected in Procedure 90DP-0IP10, "Condition Reporting." Procedure 90DP-0IP10, Revision 15, Step 3.1.2, required that the shift manager be promptly notified if a condition required immediate action to ensure the safety of plant personnel or equipment. Additionally, Procedure 90DP-0IP10, Appendix B, requires verbal notification to the leader and to the appropriate shift manager. The spent fuel handling machine operator failed to notify the shift manager and department leader for fuel operations that he took actions, which he felt were necessary to place the fuel assembly in a "safe" condition. Additionally, it appears that details regarding the seriousness of the incident and steps taken by the spent fuel handling machine operator immediately following the incident were not communicated to appropriate levels of plant management. The failure to notify the shift manager and department leader for fuel operations resulted in an inappropriate organizational response to the Fuel Assembly P1M316 event that did not involve station management in the decision-making process. This apparent violation was greater than minor because it had an actual impact on management response for damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The safety significance of this finding will be determined pending the outcome of the predecisional enforcement conference. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: FIN Finding POOR MATERIAL CONDITION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a self-revealing finding of very low safety significance (green) associated with the material condition of the spent fuel handling machine. A number of issues related to material condition, which affected spent fuel handling machine operations, was identified. These included intermittent overload and underload conditions with no identified cause, upender limit switches that often failed or required adjustments during fuel movement, an unreliable hydraulic power unit for the upender machine which occasionally resulted in the upender drifting from the vertical position, and the spent fuel handling machine trolley occasionally stopped for no apparent reason. This finding is greater than minor because it had an actual impact resulting in damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS CONTRIBUTED TO DAMAGE TO FUEL ASSEMBLY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to effectively correct conditions adverse to quality that contributed to the damage to irradiated Fuel Assembly P1M316. Specifically, Criterion XVI states, in part, that ". . . conditions adverse to quality, such as malfunctions, deficiencies, deviations, defective material and equipment, and nonconformances are promptly identified and corrected." The licensee failed to effectively correct conditions adverse to quality, which included repeated violations of equipment operating procedures and conduct of operations procedures, as well as long-standing degraded material condition of the fuel handling equipment, that ultimately contributed to the damage of irradiated Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jun 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation

3Q/2004 Inspection Findings - Palo Verde 3 Page 3 of 8 SPENT FUEL POOL WATER SIPHON DUE TO CHECK VALVE FAILURE A self-revealing noncited violation of Technical Specification 4.3.2 was identified for the failure to properly maintain a check valve (siphon breaker) between the vacuum drying skid and the spent fuel pool, such that, the spent fuel pool could not be inadvertently drained below 137 feet 6 inches. On May 14, 2004, the check valve failed to open and caused an inadvertent siphoning of approximately 20 gallons from the Unit 3 spent fuel pool to the cask washdown pit. Had the draindown continued, the spent fuel pool level could have decreased below 137 feet 6 inches. This issue was entered into the corrective action program as CRDR 2709518. The finding is greater than minor because it affected the configuration control attribute of the initiating events cornerstone. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT LOSS OF SPENT FUEL POOL INVENTORY EVENTS THROUGH TIMELY CORRECTIVE ACTIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to identify the root cause of spent fuel pool inventory loss events and implement corrective actions to preclude recurrence. Specifically, the improper positioning of a fuel pool cleanup suction valve and inadequate level monitoring resulted in three losses of spent fuel pool inventory events. This finding involves problem identification and resolution cross-cutting aspects associated with the failure to identify root causes and implement corrective actions. The issue also involved human performance cross-cutting aspects associated with mispositioned valves and awareness of plant conditions by operations personnel. This issue was entered into the corrective action program as CRDR 2599869. The finding is greater than minor because it affected the configuration control and human performance attributes of the initiating events cornerstone objective. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Mitigating Systems Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTIMELY LUBRICATION OF REACH RODS FOR SAFETY-RELATED MANUAL VALVES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to promptly correct degraded conditions associated with reach rods on safety-related manual valves. The issue involved problem identification and resolution cross-cutting aspects associated with untimely prioritization of work necessary to correct degraded equipment conditions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2328588. The finding was greater than minor safety significance because if left uncorrected, it could become a more significant safety concern in that the failure to perform maintenance on reach rod assemblies could result in an inability to operate safety-related manual valves. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and there was not a loss of safety function. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation TURBINE DRIVEN AUXILIARY FEEDWATER PUMP GOVERNOR POWER SUPPLY RESISTOR FAILURES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a significant condition adverse to quality. The adverse condition involved failed resistors in the power supply to the turbine driven auxiliary feedwater pump governor control circuits in Units 2 and 3 that had transportability to Unit 1. The finding involved problem identification and

3Q/2004 Inspection Findings - Palo Verde 3 Page 4 of 8 resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. The finding also involved human performance cross-cutting aspects associated with engineering and maintenance personnel not communicating correct technical information. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2746954. The finding was greater than minor because if left uncorrected, it could have become a more significant safety concern in that the Unit 1 turbine driven auxiliary feedwater pump could have experienced an unnecessary failure. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function for the auxiliary feedwater system. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation REACTOR LEVEL ANOMALY WHILE IN REDUCED INVENTORY Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in an unexpected reactor coolant system level anomaly during the Unit 1 reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," did not provide reduced drain rates or increased hold points when only the reactor head vent was utilized to support draining evolutions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2695262. The finding was greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual unexpected level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to assure that significant conditions adverse to quality were promptly identified and corrected. Specifically, maintenance personnel failed to promptly identify that retaining ring slots were not adequately sized to allow the use of the standard lock pins, contributing to the damage to the steam generator nozzle dam diaphragms. Subsequent to the identification, maintenance personnel failed to correct the condition by not implementing the actions recommended by plant engineers. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. That is, this finding was the direct result of licensee personnel's failure to promptly identify and correct a condition adverse to quality. This issue was entered into the licensee's corrective action program as Condition Report/Discrepancy Requests 2686201 and 2686271. This finding was greater than minor because it is associated with the mitigating systems cornerstone and affects reactor coolant system boundary performance. Specifically, the plant operated for an extended period in reduced inventory as a result of not correcting the incompatibility between the nozzle dams and the locking ring. Using Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because the senior reactor analysts' Phase 2 and 3 analyses determined that the increase in core damage frequency was approximately 3X10-7. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation INEFFECTIVE CORRECTIVE ACTIONS TO ADDRESS AN INADEQUATE SERVICE WATER PIPING INSPECTION PROGRAM Green. The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to promptly correct the lack of an adequate routine inspection and maintenance program for essential spray pond system piping and components. The finding has been entered into the licensee's corrective action program as Condition Report/Disposition Request 2732683. The finding had problem identification and resolution crosscutting aspects associated with engineering personnel not entering deficiencies into their licensee commitment tracking system and not generating a condition report/disposition request. This finding is greater than minor because it affected the reactor safety mitigating systems cornerstone objective to ensure the availability,

3Q/2004 Inspection Findings - Palo Verde 3 Page 5 of 8 reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. If left uncorrected the finding could become a more significant safety concern in that inspections of spray pond piping was not performed as committed to in the licensee's Generic Letter 89-13 response. The finding is of very low safety significance because the issue constituted a qualification deficiency that did not result in a loss of function per Generic Letter 91-18, "Information to Licensees Regarding NRC Inspection Manual Section on Resolution of Degraded and Nonconforming Conditions," Revision 1. Inspection Report# : 2004004(pdf) Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM A COMPLETE SHUT DOWN COOLING HEAT EXCHANGER TEMPERATURE LOOP CHANNEL CALIBRATION A Severity Level IV noncited violation of Technical Specification 3.3.11 was identified for the failure to include the resistance temperature detectors in the channel calibration for the shutdown cooling heat exchanger temperature instruments. Specifically, prior to the implementation of Improved Technical Specifications, the licensee did not perform testing of the resistance temperature detectors. Following the implementation of Improved Technical Specifications, the licensee did not perform an in-place qualitative assessment of the resistance temperature detectors' behavior. This issue was entered into the corrective action program as CRDR 280178. The failure to perform a complete shutdown cooling heat exchanger temperature loop channel calibration is determined to have greater than minor significance because the licensee's failure to report the condition impacted the NRC's ability to perform it's regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because it only affected the mitigating system cornerstone and the resistance temperature detectors were found to be within calibration. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM MONTHLY REVIEWS TO ENSURE EXCESS HOURS HAVE NOT BEEN ASSIGNED The inspectors identified a noncited violation of Technical Specification 5.2.2.d for the failure of authorized individuals to review monthly overtime reports to ensure that excessive hours have not been assigned. Specifically, following the implementation of an electronic reporting system in 2001, the licensee did not ensure that all managers continued to receive and approve the Excess Hours Report. The finding is greater than minor because if left uncorrected it could become a more significant safety concern in that exceeding the NRC Generic Letter 82-02, "Nuclear Power Plant Staff Working Hours," guidelines for overtime limits is a contributor to worker fatigue. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because there were no known actual adverse plant or equipment conditions that could be attributed to worker fatigue. Inspection Report# : 2004003(pdf) Significance: Jun 18, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECTLY TRANSLATE DESIGN INFORMATION INTO THE AS-BUILT CONFIGURATION The team identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion III, "Design Control." The licensee failed to correctly translate design information into the as-built configuration of the auxiliary feedwater system, in that, 28 feet of exposed auxiliary feedwater minimum flow recirculation line was not protected from a tornado-generated missile for both trains as described in Design Basis Manual, Table 2-1 and Section 10.4.9.1, "Design Basis," of the Final Safety Analysis Report. This issue was entered into the licensee's corrective action program as Condition Report/Deficiency Request 2721947. In accordance with NRC Inspection Manual 0612, Appendix B, "Issue Screening," this finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone, and affected the cornerstone objective to ensure the capability of systems to respond to initiating events. The inspectors evaluated the issue using the Phase 1 Screening Worksheet for the Initiating Events, Mitigating Systems, and Barriers Cornerstones provided in Manual Chapter 0609, Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations." The finding was determined to be of very low safety significance because: the finding did not represent an actual loss of safety function and because the analyst determined that the system would continue to meet its risk-significant function following a postulated tornado initiating event. Inspection Report# : 2004007(pdf) Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation

3Q/2004 Inspection Findings - Palo Verde 3 Page 6 of 8 FAILURE TO IDENTIFY DEGRADATION OF POLYETHYLENE CHANNELS ON CLASS 1E BATTERIES Green. The inspectors identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions. Specifically, the licensee did not identify the degradation of polyethylene insulating channels on Class 1E station batteries. Missing insulating channels could affect the seismic qualification of the batteries. This finding is greater than minor because it affects the reactor safety mitigating system cornerstone objective to ensure the capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, the finding was determined to have a very low safety significance, since there was no case where enough insulating channels had slipped to affect the seismic analyses, and the batteries remained in their design configuration. Inspection Report# : 2004002(pdf) Significance: Dec 31, 2003 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Surveillance Requirement 3.5.3.8 Green. The inspectors identified a noncited violation for the licensee's failure to implement Surveillance Requirement 3.5.3.8 for all three units. The licensee failed to identify and remove debris in Trains A and B emergency core cooling system sumps during their last performance of Procedure 31ST-SI01, "Cleaning/Inspection of ECCS Sumps," Revision 7. Specifically, the licensee failed to identify unqualified tie-wraps that were attached to the stem of the containment sump suction valves inside the emergency core cooling system sumps. This finding is greater than minor, since it affected the mitigating system cornerstone objective of equipment reliability because the debris could have affected containment spray pump flow by clogging spray nozzles. The finding is of very low safety significance because the amount of debris would have only degraded containment spray pump flow during a potential large break loss of coolant accident, but the safety function would have been fulfilled based on the small amount of debris. Inspection Report# : 2003005(pdf) Barrier Integrity Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation CONTAINMENT PURGE PENETRATION NONCONFORMANCE A Severity Level IV noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a nonconforming condition in a timely manner. Specifically, since June 2001, the licensee discontinued implementation of required Technical Specification surveillance testing for the containment purge valves by declaring the valves inoperable and installing blind flanges. This issue was entered into the corrective action program as CRDR 2711167. The finding is greater than minor because the licensee's failure to submit a license amendment to correct the nonconforming condition impacted the NRC's ability to perform its regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone and the installation of blind flanges adequately maintained containment integrity. Inspection Report# : 2004003(pdf) Significance: SL-IV May 21, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROVIDE AN EVALUATION OF A CHANGE TO THE FACILITY AS DESCRIBED IN THE UFSAR, UNDER 10 CFR 50.59 REQUIREMENTS The team identified a Severity Level IV violation of 10 CFR 50.59 requirements for failing to evaluate a modification to spent fuel storage in the spent fuel pools. The team reviewed CRDR 2524176, regarding the lack of a criticality analysis to support the use of rod capture tubes, which hold individual harvested fuel pins, in the spent fuel rack. The team reviewed the licensee's process of storing individual fuel pins, removed from a parent fuel assembly, and placed in rod capture tubes to be located in guide tubes of another host assembly. This resulted in a component that had nuclear fuel pins, of varying enrichment and depletion, stored as a regular fuel assembly in the spent fuel pools. The team noted that Section 9.1 of the UFSAR specifically described the storage of spent fuel in regions based upon fuel assembly initial enrichment, actual burnup, and actual decay time. The UFSAR does not describe the storage of individual pins in these regions. The licensee previously interpreted this as meaning the UFSAR did not prohibit such storage, and would not require consideration of enrichment, burnup, and decay of individual pins. The licensee failed to provide an evaluation of a change to the facility as described in the UFSAR, under 10 CFR 50.59 requirements. The licensee subsequently performed an evaluation of the criticality under station procedure 72DP-9NF01, "Control of SNM

3Q/2004 Inspection Findings - Palo Verde 3 Page 7 of 8 Transfer and Inventory," which was found acceptable. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the barrier integrity cornerstone attribute of human performance, and could have represented a more significant issue if left uncorrected. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The team leader and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the barrier integrity function. The licensee entered this issue into its corrective action program as CRDR 2711241. Inspection Report# : 2004006(pdf) Emergency Preparedness Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation IMPLEMENTATION OF A CHANGE TO TABLE 1 WHICH WAS A DECREASE IN EFFECTIVENESS OF THE EMERGENCY PLAN Green. On February 16, 2003, the licensee implemented an emergency plan change, which decreased the required number of onshift emergency responders. This change constituted a decrease in effectiveness of the emergency plan because it could have resulted in a dedicated onshift communicator being replaced by a shift technical advisor, with a loss of one onshift position. Implementation of changes to the emergency plan, which constitute a reduction in the effeciveness of the plan without prior NRC approval, was a noncited violation of 10 CFR 50.54(q). The finding was evaluated using NUREG-1600, "General Statement of Policy and Procedure for NRC Enforcement Actions," Section IV, because licensee reductions in the effectiveness of its emergency plan impact the regulatory process. The finding had greater than minor significance because reducing the required number of onshift emergency responders had the potential to impact the ability to perform all necessary emergency functions. The finding was determined to be a noncited Severity Level IV violation because the emergency plan change constituted a failure to implement a regulatory requirement, but did not constitute a failure to meet an emergency planning standard as defined by 10 CFR 50.47(b) because actual staffing levels remained above the emergency plan minimum. This finding has been entered into the licensee's corrective action program as Condition Report Disposition Request 2670023. Inspection Report# : 2004002(pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Significance: N/A May 21, 2004 Identified By: NRC Item Type: FIN Finding IDENTIFICATION AND RESOLUTION OF PROBLEMS The team concluded that the licensee was generally effective at identifying problems and processing them through the corrective action

3Q/2004 Inspection Findings - Palo Verde 3 Page 8 of 8 program. The licensee effectively prioritized and evaluated issues with a few exceptions. The team identified examples where the licensee had not evaluated identified issues for proper compliance with 10 CFR 50.59 requirements. Additionally, in some cases, corrective actions were not timely or fully documented. Licensee audits and assessments were found to be effective except for one example involving maintenance rule application to radiation monitors. On the basis of interviews conducted during this inspection, workers at the site felt free to input safety findings into the corrective action program. Inspection Report# : 2004006(pdf) Last modified : December 29, 2004

4Q/2004 Inspection Findings - Palo Verde 3 Page 1 of 12 Palo Verde 3 4Q/2004 Plant Inspection Findings Initiating Events Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO REMOVE PIPE SUPPORT LEADS TO RCS PRESSURE BOUNDARY LEAK Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for the failure to implement a modification. The modification should have removed a pipe support associated with a high pressure safety injection system drain line. The failure to remove the pipe support, combined with high vibrations, resulted in a reactor coolant system pressure boundary leak from a cracked socket weld upstream of high pressure safety injection header drain Valve 1-P-SIA-V056. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2669474. The finding is greater than minor since it is associated with the equipment performance and design control attributes of the initiating events cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because assuming worst case degradation, the leak would not have exceeded the Technical Specification limit for identified reactor coolant system leakage and mitigating systems were not affected. Inspection Report# : 2004004(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURS FOR OPERATION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with a failure to operate the spent fuel handling machine in accordance with Procedure 78OP-9FX03, "Spent Fuel Handling Machine," Revision 16. There were three instances of this: (1) On October 4, 2002, the spent fuel handling machine operator moved fuel assemblies of two differing weights and was not cognizant of design differences of the fuel assemblies and did not stop fuel movement when the load was greater than 50 lbs. different from expected; (2) On October 4, 2002, the spent fuel handling machine operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly, and (3) later on October 4, 2002, another spent fuel handling operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly. In both Examples (2) and (3), the operators failed to verify the "UP LIMIT" light was on and failed to verify the hoist indicator was at the "UPLIMIT." As a result, in Example (3), the one fuel assembly was damaged. These issues were contrary to Procedure 78OP-9FX03 and resulted in damage to the lower grid assembly of Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products to the environment. The finding is of very low safety significance because all mitigation systems were available during the fuel movement operations and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of human performance. Inspection Report# : 2004011(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PRESCRIBE ADEQUATE INSTRUCTIONS FOR ENTRY INTO ABNORMAL OPERATING PROCEDURE, PVNGS PROCEDURE 40AO-9ZZ22, "FUEL DAMAGE," REVISION 2 THROUGH 6 The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with an inadequate abnormal operating procedure. Specifically, the inspectors determined that Palo Verde Nuclear Generating Station Procedure 40AO-9ZZ22, "Fuel Damage," Revisions 1 through 6, were not adequate in that the entry conditions never required operations personnel to enter the procedure and take actions to mitigate the event. Step 1.1 states, in part, "Section 3.0, Irradiated Fuel Damage may be entered when any of the following conditions exist . . . when equipment or component failures result in any of the following: irradiated fuel assembly contacting a solid structure; bubbles emerging from a spent fuel assembly; bent, twisted, or warped spent fuel assembly; or visual damage to spent fuel pin cladding." Since this abnormal operating procedure was never entered, applicable actions were never considered during the Fuel Assembly P1M316 event. This finding is greater than minor because actions taken in response to fuel handling errors could result in significant fuel cladding damage and

4Q/2004 Inspection Findings - Palo Verde 3 Page 2 of 12 effect the barrier cornerstone. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: FIN Finding POOR MATERIAL CONDITION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a self-revealing finding of very low safety significance (green) associated with the material condition of the spent fuel handling machine. A number of issues related to material condition, which affected spent fuel handling machine operations, was identified. These included intermittent overload and underload conditions with no identified cause, upender limit switches that often failed or required adjustments during fuel movement, an unreliable hydraulic power unit for the upender machine which occasionally resulted in the upender drifting from the vertical position, and the spent fuel handling machine trolley occasionally stopped for no apparent reason. This finding is greater than minor because it had an actual impact resulting in damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS CONTRIBUTED TO DAMAGE TO FUEL ASSEMBLY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to effectively correct conditions adverse to quality that contributed to the damage to irradiated Fuel Assembly P1M316. Specifically, Criterion XVI states, in part, that ". . . conditions adverse to quality, such as malfunctions, deficiencies, deviations, defective material and equipment, and nonconformances are promptly identified and corrected." The licensee failed to effectively correct conditions adverse to quality, which included repeated violations of equipment operating procedures and conduct of operations procedures, as well as long-standing degraded material condition of the fuel handling equipment, that ultimately contributed to the damage of irradiated Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jun 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation SPENT FUEL POOL WATER SIPHON DUE TO CHECK VALVE FAILURE A self-revealing noncited violation of Technical Specification 4.3.2 was identified for the failure to properly maintain a check valve (siphon breaker) between the vacuum drying skid and the spent fuel pool, such that, the spent fuel pool could not be inadvertently drained below 137 feet 6 inches. On May 14, 2004, the check valve failed to open and caused an inadvertent siphoning of approximately 20 gallons from the Unit 3 spent fuel pool to the cask washdown pit. Had the draindown continued, the spent fuel pool level could have decreased below 137 feet 6 inches. This issue was entered into the corrective action program as CRDR 2709518. The finding is greater than minor because it affected the configuration control attribute of the initiating events cornerstone. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT LOSS OF SPENT FUEL POOL INVENTORY EVENTS THROUGH TIMELY CORRECTIVE ACTIONS

4Q/2004 Inspection Findings - Palo Verde 3 Page 3 of 12 A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to identify the root cause of spent fuel pool inventory loss events and implement corrective actions to preclude recurrence. Specifically, the improper positioning of a fuel pool cleanup suction valve and inadequate level monitoring resulted in three losses of spent fuel pool inventory events. This finding involves problem identification and resolution cross-cutting aspects associated with the failure to identify root causes and implement corrective actions. The issue also involved human performance cross-cutting aspects associated with mispositioned valves and awareness of plant conditions by operations personnel. This issue was entered into the corrective action program as CRDR 2599869. The finding is greater than minor because it affected the configuration control and human performance attributes of the initiating events cornerstone objective. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Mitigating Systems Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW THE OPERABILITY DETERMINATION PROCESS FOR A DEGRADED CONDITION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for failing to follow documented procedures when performing activities affecting quality. Administrative Procedure 40DP-90P26, "Operability Determination," was not followed when performing an operability assessment of emergency diesel generator fuel oil transfer pump Train A following identification of water in the electrical conduit and junction boxes associated with the power supply to the pump. Specifically, licensee personnel failed to consider water intrusion into the electrical conduit for emergency diesel generator fuel oil transfer pump Train A as a condition that could affect the ability of the emergency diesel generator to perform its specified function, and consequently, declared emergency diesel generator Train A operable. The finding involved problem identification and resolution crosscutting aspects in that licensee personnel failed to recognize water intrusion into the conduit box as a potential deficiency that could impact emergency diesel generator operability until prompted by the inspectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2763326. The finding is greater than minor since it is associated with the equipment performance attribute of the mitigating system cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, this finding is determined to have very low safety significance because it only affects the mitigating system cornerstone and was a deficiency that did not result in the actual loss of the safety function of the emergency diesel generator. Inspection Report# : 2004005(pdf) Significance: TBD Dec 09, 2004 Identified By: NRC Item Type: AV Apparent Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The finding has a potential safety significance greater than very low significance (i.e., Greater than Green) based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURE The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," involving the

4Q/2004 Inspection Findings - Palo Verde 3 Page 4 of 12 failure of engineering and operations personnel to implement requirements in the station's condition reporting and operability determination procedures following identification of a degraded condition. Specifically, engineering personnel did not promptly notify operations personnel of a condition that impacted the safety function of the high pressure safety injection and containment spray systems. In addition, operations personnel did not complete an immediate assessment of operability once they were informed of the degraded condition. This finding had crosscutting aspects associated with problem identification and resolution, since engineering personnel did not forward corrective action program documents regarding the degraded condition to the control room in a timely manner and operations personnel did not complete a prompt operability assessment. This finding also involved crosscutting aspects associated human performance, since engineering and operations personnel did not adequately communicate the status of the engineering department's efforts to review the degraded condition. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding has very low safety significance based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: SL-IV Dec 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM WRITTEN SAFETY EVALUATION IN ACCORDANCE WITH 10 CFR 50.59 REQUIREMENTS The team identified three examples of a noncited, Severity Level IV violation of 10 CFR 50.59 requirements involving the failure to perform written safety evaluations prior to implementing changes to the facility. The first example involved a change for using manual actions in lieu of automatic actions as compensatory measures to support the safety functions of the high pressure safety injection and containment spray systems during postulated design basis loss-of-coolant accident conditions following a recirculation actuation signal. The second example involved operation of emergency core cooling systems with a 10-20 cubic foot void in the suction piping. The third example involved the failure to perform a written safety evaluation for changes involving filling the containment sump with borated water to a level above the containment sump safety injection recirculation piping. These changes were implemented in response to identifying that the safety injection system was not being maintained full of water. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the team determined that traditional enforcement applied because this finding may have impacted the NRC's ability to perform its regulatory function. The severity level of this finding was assessed as having very low safety significance reflective of a Severity Level IV violation. This determination was based in part on use of the significance determination process. Inspection Report# : 2004014(pdf) Significance: TBD Dec 09, 2004 Identified By: NRC Item Type: AV Apparent Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A CHANGE TO THE FACILITY INVOLVING MAINTAINING A SIGNIFICANT SEGMENT OF CONTAINMENT SUMP SAFETY INJECTION RECIRCULATION PIPING VOID OF WATER The team identified an apparent violation of 10 CFR 50.59 requirements for the licensee's failure to perform a written safety evaluation and receive NRC approval prior to implementing changes to the facility in 1992 which involved draining, and maintaining drained, a significant segment of containment sump safety injection recirculation piping during normal plant operations. This change resulted in the failure to maintain the safety injection piping full of water in accordance with the Updated Final Safety Analysis Report. This represented an unreviewed safety question since it increased the probability of a malfunction of equipment important to safety previously evaluated in the safety analysis report. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the team determined that traditional enforcement applied because this finding may have impacted the NRC's ability to perform its regulatory function. This is an apparent violation pending the results of a predecisional enforcement conference. Inspection Report# : 2004014(pdf) Significance: Oct 05, 2004 Identified By: NRC Item Type: NCV NonCited Violation EXCESSIVE RCS DRAIN RATES USED TO ESTABLISH MIDLOOP CONDITIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in a reactor coolant system level deviation during the reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," Revision 45, was inadequate in that it did not provide reduced drain rates or increased hold points to minimize the excessive difference between actual and indicated reactor coolant system level caused by static head difference between the pressurizer/surge line and the reactor. The finding involved problem identification and resolution crosscutting aspects that contributed to the finding in that engineering documents were available that specified correct drain rates, but these drain rates were not referenced until NRC inspectors questioned the justification of the procedurally allowed values. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2742525. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and

4Q/2004 Inspection Findings - Palo Verde 3 Page 5 of 12 affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual indicated level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004005(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTIMELY LUBRICATION OF REACH RODS FOR SAFETY-RELATED MANUAL VALVES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to promptly correct degraded conditions associated with reach rods on safety-related manual valves. The issue involved problem identification and resolution cross-cutting aspects associated with untimely prioritization of work necessary to correct degraded equipment conditions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2328588. The finding was greater than minor safety significance because if left uncorrected, it could become a more significant safety concern in that the failure to perform maintenance on reach rod assemblies could result in an inability to operate safety-related manual valves. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and there was not a loss of safety function. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation TURBINE DRIVEN AUXILIARY FEEDWATER PUMP GOVERNOR POWER SUPPLY RESISTOR FAILURES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a significant condition adverse to quality. The adverse condition involved failed resistors in the power supply to the turbine driven auxiliary feedwater pump governor control circuits in Units 2 and 3 that had transportability to Unit 1. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. The finding also involved human performance cross-cutting aspects associated with engineering and maintenance personnel not communicating correct technical information. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2746954. The finding was greater than minor because if left uncorrected, it could have become a more significant safety concern in that the Unit 1 turbine driven auxiliary feedwater pump could have experienced an unnecessary failure. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function for the auxiliary feedwater system. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation REACTOR LEVEL ANOMALY WHILE IN REDUCED INVENTORY Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in an unexpected reactor coolant system level anomaly during the Unit 1 reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," did not provide reduced drain rates or increased hold points when only the reactor head vent was utilized to support draining evolutions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2695262. The finding was greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual unexpected level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004004(pdf)

4Q/2004 Inspection Findings - Palo Verde 3 Page 6 of 12 Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to assure that significant conditions adverse to quality were promptly identified and corrected. Specifically, maintenance personnel failed to promptly identify that retaining ring slots were not adequately sized to allow the use of the standard lock pins, contributing to the damage to the steam generator nozzle dam diaphragms. Subsequent to the identification, maintenance personnel failed to correct the condition by not implementing the actions recommended by plant engineers. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. That is, this finding was the direct result of licensee personnel's failure to promptly identify and correct a condition adverse to quality. This issue was entered into the licensee's corrective action program as Condition Report/Discrepancy Requests 2686201 and 2686271. This finding was greater than minor because it is associated with the mitigating systems cornerstone and affects reactor coolant system boundary performance. Specifically, the plant operated for an extended period in reduced inventory as a result of not correcting the incompatibility between the nozzle dams and the locking ring. Using Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because the senior reactor analysts' Phase 2 and 3 analyses determined that the increase in core damage frequency was approximately 3X10-7. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation INEFFECTIVE CORRECTIVE ACTIONS TO ADDRESS AN INADEQUATE SERVICE WATER PIPING INSPECTION PROGRAM Green. The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to promptly correct the lack of an adequate routine inspection and maintenance program for essential spray pond system piping and components. The finding has been entered into the licensee's corrective action program as Condition Report/Disposition Request 2732683. The finding had problem identification and resolution crosscutting aspects associated with engineering personnel not entering deficiencies into their licensee commitment tracking system and not generating a condition report/disposition request. This finding is greater than minor because it affected the reactor safety mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. If left uncorrected the finding could become a more significant safety concern in that inspections of spray pond piping was not performed as committed to in the licensee's Generic Letter 89-13 response. The finding is of very low safety significance because the issue constituted a qualification deficiency that did not result in a loss of function per Generic Letter 91-18, "Information to Licensees Regarding NRC Inspection Manual Section on Resolution of Degraded and Nonconforming Conditions," Revision 1. Inspection Report# : 2004004(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO ADDRESS EMERGENCY DIESEL GENERATOR CIRCUIT FAILURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified because the licensee failed to implement their corrective action program when an emergency diesel-generator excitation circuit failed. The failure precluded the emergency diesel generator from achieving rated voltage within the required time. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function at the time. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW INADEQUATE EMERGENCY OPERATING PROCEDURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," with two examples, was identified because the licensee failed to implement contingency actions when two circuit breakers failed to operate during recovery operations in Units 1 and 3. Specifically, operators deviated from the Emergency Operating Procedure for Loss of Offsite Power/Loss of Forced Circulation when they initiated maintenance on the two failed breakers instead of performing the contingency actions prescribed by the procedure. In addition, for Unit 1, the procedure was inadequate because it did not list all available contingency actions available to operators for restoring power to the electrical bus.

4Q/2004 Inspection Findings - Palo Verde 3 Page 7 of 12 The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and redundancy existed in other electrical buses. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT CORRECTIVE ACTIONS FOR AUXILIARY FEEDWATER A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified by the team because the licensee failed to implement timely corrective actions to ensure that the feedwater system was operated in a manner that would minimize the possibility of thermally induced vibration that could affect auxiliary feedwater system operability. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because no transient occurred that necessitated implementation of the needed corrective actions. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE EMERGENCY OPERATING PROCEDURE FOR AUXILIARY FEEDWATER OPERATION A noncited violation of Technical Specification 5.4.1 was identified because the licensee implemented an inadequate Emergency Operating Procedure. Specifically, the procedure failed to provide direction to maintain turbine-driven auxiliary feedwater pumps operable following a main steam isolation signal. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps did not become inoperable. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MANAGE STATION RISK A noncited violation of 10 CFR 50.65, "Maintenance Rule," was identified because the licensee failed to perform a risk assessment. Specifically, the licensee inappropriately decided to begin draining the Unit 1 turbine-driven auxiliary feedwater pump steam traps first, without addressing the higher risk profile in Unit 2 which resulted from having an inoperable emergency diesel generator. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps were not needed. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT LOOP EMERGENCY OPEARTING PROCEDRE A noncited violation of Technical Specification 5.4.1 was identified because the licensee failed to follow emergency operating procedures. Specifically, the control room operator and an auxiliary operator performed the incorrect steps in Emergency Operating Procedure 40EP-9EO07, "Loss of Offsite Power/Loss of Forced Circulation," Revision 10. The Unit 2, Positive Displacement Charging Pump "E" was temporarily lost due to these human performance errors and resulted in a total loss of Unit 2 charging flow for a short period. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function and no significant delays occurred that adversely impacted operator response to the event. Inspection Report# : 2004013(pdf) Significance: SL-IV Jun 30, 2004

4Q/2004 Inspection Findings - Palo Verde 3 Page 8 of 12 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM A COMPLETE SHUT DOWN COOLING HEAT EXCHANGER TEMPERATURE LOOP CHANNEL CALIBRATION A Severity Level IV noncited violation of Technical Specification 3.3.11 was identified for the failure to include the resistance temperature detectors in the channel calibration for the shutdown cooling heat exchanger temperature instruments. Specifically, prior to the implementation of Improved Technical Specifications, the licensee did not perform testing of the resistance temperature detectors. Following the implementation of Improved Technical Specifications, the licensee did not perform an in-place qualitative assessment of the resistance temperature detectors' behavior. This issue was entered into the corrective action program as CRDR 280178. The failure to perform a complete shutdown cooling heat exchanger temperature loop channel calibration is determined to have greater than minor significance because the licensee's failure to report the condition impacted the NRC's ability to perform it's regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because it only affected the mitigating system cornerstone and the resistance temperature detectors were found to be within calibration. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM MONTHLY REVIEWS TO ENSURE EXCESS HOURS HAVE NOT BEEN ASSIGNED The inspectors identified a noncited violation of Technical Specification 5.2.2.d for the failure of authorized individuals to review monthly overtime reports to ensure that excessive hours have not been assigned. Specifically, following the implementation of an electronic reporting system in 2001, the licensee did not ensure that all managers continued to receive and approve the Excess Hours Report. The finding is greater than minor because if left uncorrected it could become a more significant safety concern in that exceeding the NRC Generic Letter 82-02, "Nuclear Power Plant Staff Working Hours," guidelines for overtime limits is a contributor to worker fatigue. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because there were no known actual adverse plant or equipment conditions that could be attributed to worker fatigue. Inspection Report# : 2004003(pdf) Significance: Jun 18, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECTLY TRANSLATE DESIGN INFORMATION INTO THE AS-BUILT CONFIGURATION The team identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion III, "Design Control." The licensee failed to correctly translate design information into the as-built configuration of the auxiliary feedwater system, in that, 28 feet of exposed auxiliary feedwater minimum flow recirculation line was not protected from a tornado-generated missile for both trains as described in Design Basis Manual, Table 2-1 and Section 10.4.9.1, "Design Basis," of the Final Safety Analysis Report. This issue was entered into the licensee's corrective action program as Condition Report/Deficiency Request 2721947. In accordance with NRC Inspection Manual 0612, Appendix B, "Issue Screening," this finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone, and affected the cornerstone objective to ensure the capability of systems to respond to initiating events. The inspectors evaluated the issue using the Phase 1 Screening Worksheet for the Initiating Events, Mitigating Systems, and Barriers Cornerstones provided in Manual Chapter 0609, Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations." The finding was determined to be of very low safety significance because: the finding did not represent an actual loss of safety function and because the analyst determined that the system would continue to meet its risk-significant function following a postulated tornado initiating event. Inspection Report# : 2004007(pdf) Significance: Apr 19, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO PROVIDE ADEQUATE MAINTENANCE PROCEDURE A noncited violation of Technical Specification 5.4.1.d was identified for an inadequate fire protection program maintenance procedure used to replace underground fire protection post indicator valves. The procedure did not clearly indicate that the preassembled bolts (body to bonnet), as well as other bolts, were to be coated for corrosion protection. This allowed the bolts to corrode, causing failure of the valve and a degradation of the site yard fire main distribution piping and a loss of approximately 278,000 gallons of fire protection water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2700170. This finding is greater than minor because it is associated with the degraded fire protection attribute of the mitigating systems cornerstone and

4Q/2004 Inspection Findings - Palo Verde 3 Page 9 of 12 affected the cornerstone objective, which is to ensure the availability, reliability, and capability of systems that mitigate initiating events to prevent reactor accidents. Specifically, the site yard fire main distribution piping was degraded for 45 minutes. Using the Significance Determination Process Phase 1 Worksheet, the finding was determined to have a very low safety significance because it did not involve complete, long-term impairment of the fire protection system. Specifically, the required fire protection water inventory remained above the design reserve level, and the fire main was degraded less than 1 hour. Inspection Report# : 2004005(pdf) Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADATION OF POLYETHYLENE CHANNELS ON CLASS 1E BATTERIES Green. The inspectors identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions. Specifically, the licensee did not identify the degradation of polyethylene insulating channels on Class 1E station batteries. Missing insulating channels could affect the seismic qualification of the batteries. This finding is greater than minor because it affects the reactor safety mitigating system cornerstone objective to ensure the capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, the finding was determined to have a very low safety significance, since there was no case where enough insulating channels had slipped to affect the seismic analyses, and the batteries remained in their design configuration. Inspection Report# : 2004002(pdf) Barrier Integrity Significance: Nov 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO INCLUDE VENTS AND DRAINS INTO LOCKED VALVE PROGRAM A noncited violation of Technical Specification Surveillance Requirement 3.6.3.3 was identified for failure to perform the required position verification for vent and drain valves associated with eight safety injection system penetrations per unit. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2753335. This finding is greater than minor since it is associated with the configuration control attribute of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the containment physical design barrier is preserved to protect the public from radio nuclide releases caused by accidents or events. Using the Phase 1 Worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone, all the valves were found closed, and did not result in an actual open pathway out of the reactor containment. Inspection Report# : 2004005(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE MAIN GENERATOR EXCITATION LIMITER CIRCUIT PROBLEMS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," was identified because the licensee failed to follow the procedure for dispositioning a degraded condition for continued use. Specifically, the licensee failed to place a degraded main generator excitation limiter circuit into the work control process via the appropriate procedure to ensure that it was appropriately evaluated and processed. The finding was greater than minor because it was associated with the human performance attribute of the barrier integrity cornerstone and impacted the cornerstone objective to provide reasonable assurance that physical design barriers, in this case the fuel cladding, protect the public from radio nuclide releases caused by accidents or events. Inspection Report# : 2004013(pdf) Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation CONTAINMENT PURGE PENETRATION NONCONFORMANCE A Severity Level IV noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a nonconforming condition in a timely manner. Specifically, since June 2001, the licensee discontinued implementation of required

4Q/2004 Inspection Findings - Palo Verde 3 Page 10 of 12 Technical Specification surveillance testing for the containment purge valves by declaring the valves inoperable and installing blind flanges. This issue was entered into the corrective action program as CRDR 2711167. The finding is greater than minor because the licensee's failure to submit a license amendment to correct the nonconforming condition impacted the NRC's ability to perform its regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone and the installation of blind flanges adequately maintained containment integrity. Inspection Report# : 2004003(pdf) Significance: SL-IV May 21, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROVIDE AN EVALUATION OF A CHANGE TO THE FACILITY AS DESCRIBED IN THE UFSAR, UNDER 10 CFR 50.59 REQUIREMENTS The team identified a Severity Level IV violation of 10 CFR 50.59 requirements for failing to evaluate a modification to spent fuel storage in the spent fuel pools. The team reviewed CRDR 2524176, regarding the lack of a criticality analysis to support the use of rod capture tubes, which hold individual harvested fuel pins, in the spent fuel rack. The team reviewed the licensee's process of storing individual fuel pins, removed from a parent fuel assembly, and placed in rod capture tubes to be located in guide tubes of another host assembly. This resulted in a component that had nuclear fuel pins, of varying enrichment and depletion, stored as a regular fuel assembly in the spent fuel pools. The team noted that Section 9.1 of the UFSAR specifically described the storage of spent fuel in regions based upon fuel assembly initial enrichment, actual burnup, and actual decay time. The UFSAR does not describe the storage of individual pins in these regions. The licensee previously interpreted this as meaning the UFSAR did not prohibit such storage, and would not require consideration of enrichment, burnup, and decay of individual pins. The licensee failed to provide an evaluation of a change to the facility as described in the UFSAR, under 10 CFR 50.59 requirements. The licensee subsequently performed an evaluation of the criticality under station procedure 72DP-9NF01, "Control of SNM Transfer and Inventory," which was found acceptable. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the barrier integrity cornerstone attribute of human performance, and could have represented a more significant issue if left uncorrected. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The team leader and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the barrier integrity function. The licensee entered this issue into its corrective action program as CRDR 2711241. Inspection Report# : 2004006(pdf) Emergency Preparedness Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE PROCEDURES FOR IMPLEMENTATION OF AN EMERGENCY ACTION LEVEL The examiners identified a noncited violation of 10 CFR Part 50, Appendix E, IV.B, for inadequate procedures for implementation of an emergency action level. Emergency Action Level 3-13 requires that an Alert be declared if "major damage to irradiated fuel" is accompanied by a "valid high radiation alarm on the associated radiation monitor." However, the phrase "major damage to irradiated fuel" is not defined in any site procedure, nor is it defined, clarified, or addressed through operator training such that operators would know when conditions meet the threshold for declaring an Alert as a result of damage to irradiated fuel. This deficiency was evidenced during the examination by the fact that the examination authors, examination reviewers, and five of the seven license applicants taking the examination did not recognize conditions that warranted declaring an Alert using Emergency Action Level 3-13. The licensee was evaluating a clarifying change to Emergency Action Level 3-13 and its bases documents and has documented this issue in Condition Report/Disposition Request 2761670. The finding is a performance deficiency in that the licensee failed to identify that Emergency Action Level 3-13 would not be properly implemented without objectively defining the phrase "major damage to irradiated fuel" in either plant procedures or operator training. The finding is more than minor because it affects the Emergency Preparedness Cornerstone of procedural quality in that it could result in a failure to declare an Alert emergency classification when conditions warrant. The finding is of very low safety significance since it was a failure to comply with a regulatory requirement associated with a Risk-Significant Planning Standard that did not result in the loss or degradation of that Risk-Significant Planning Standard function. Inspection Report# : 2004301(pdf)

4Q/2004 Inspection Findings - Palo Verde 3 Page 11 of 12 Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation TECHNICAL SUPPORT CENTER UNAVAILABLE A noncited violation of 10 CFR 50.49(q) was identified because the licensee failed to follow the emergency plan when they did not adequately maintain facilities required for emergency response. Specifically, the Technical Support Center (TSC) EDG failed because a test switch was not returned to its proper position following maintenance 6 days prior to the event. As a result, the emergency response organization assembled in the alternate TSC. This resulted in some confusion and posed some unique challenges to the emergency response organization. The finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 8 is considered a failure to comply with planning standard 8 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT EMERGENCY PLAN A noncited violation of 10 CFR 50.49(q) was identified because the licensee failed to follow the emergency plan when they did not ensure that adequate command and control was established during the event. Specifically, the licensee did not follow Emergency Plan Implementing Procedure 1, "Satellite Technical Support Center Actions," which requires that for multiple unit events, the Unit 1 shift manager is responsible for initially classifying and declaring the emergency and assuming the position of the on-shift emergency coordinator. As a result, each of the units' respective shift managers initially assumed the role of emergency coordinator and resulted in notification irregularities to state and local officials. The finding is more than minor because it is related to the emergency preparedness cornerstone attribute of Response organization performance, and affects the cornerstone objective in that command and control challenges resulting in inaccurate communications to the offsite officials could potentially affect the ability to ensure that adequate measures would be taken to protect the public health and safety. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTILMELY AUGMENTATION OF ERGENCY PERSONNEL A noncited violation of 10 CFR 50.54(q) was identified because the licensee failed to follow the emergency plan. Specifically, the licensee failed to meet minimum staffing goals of Table 1, "Minimum Staffing Requirements for PVNGS for Nuclear Power Plant Emergencies" following the Alert declaration on June 14, 2004. This finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 2 is considered a failure to comply with planning standard 2 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf) Significance: Mar 31, 2004 Identified By: NRC Item Type: NCV NonCited Violation IMPLEMENTATION OF A CHANGE TO TABLE 1 WHICH WAS A DECREASE IN EFFECTIVENESS OF THE EMERGENCY PLAN Green. On February 16, 2003, the licensee implemented an emergency plan change, which decreased the required number of onshift emergency responders. This change constituted a decrease in effectiveness of the emergency plan because it could have resulted in a dedicated onshift communicator being replaced by a shift technical advisor, with a loss of one onshift position. Implementation of changes to the emergency plan, which constitute a reduction in the effeciveness of the plan without prior NRC approval, was a noncited violation of 10 CFR 50.54(q). The finding was evaluated using NUREG-1600, "General Statement of Policy and Procedure for NRC Enforcement Actions," Section IV, because licensee reductions in the effectiveness of its emergency plan impact the regulatory process. The finding had greater than minor significance because reducing the required number of onshift emergency responders had the potential to impact the ability to perform all necessary emergency functions. The finding was determined to be a noncited Severity Level IV violation because the emergency plan change constituted a failure to implement a regulatory requirement, but did not constitute a failure to meet an emergency planning standard as defined

4Q/2004 Inspection Findings - Palo Verde 3 Page 12 of 12 by 10 CFR 50.47(b) because actual staffing levels remained above the emergency plan minimum. This finding has been entered into the licensee's corrective action program as Condition Report Disposition Request 2670023. Inspection Report# : 2004002(pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Significance: N/A May 21, 2004 Identified By: NRC Item Type: FIN Finding IDENTIFICATION AND RESOLUTION OF PROBLEMS The team concluded that the licensee was generally effective at identifying problems and processing them through the corrective action program. The licensee effectively prioritized and evaluated issues with a few exceptions. The team identified examples where the licensee had not evaluated identified issues for proper compliance with 10 CFR 50.59 requirements. Additionally, in some cases, corrective actions were not timely or fully documented. Licensee audits and assessments were found to be effective except for one example involving maintenance rule application to radiation monitors. On the basis of interviews conducted during this inspection, workers at the site felt free to input safety findings into the corrective action program. Inspection Report# : 2004006(pdf) Last modified : March 09, 2005

1Q/2005 Inspection Findings - Palo Verde 3 Page 1 of 14 Palo Verde 3 1Q/2005 Plant Inspection Findings Initiating Events Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO REMOVE PIPE SUPPORT LEADS TO RCS PRESSURE BOUNDARY LEAK Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for the failure to implement a modification. The modification should have removed a pipe support associated with a high pressure safety injection system drain line. The failure to remove the pipe support, combined with high vibrations, resulted in a reactor coolant system pressure boundary leak from a cracked socket weld upstream of high pressure safety injection header drain Valve 1-P-SIA-V056. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2669474. The finding is greater than minor since it is associated with the equipment performance and design control attributes of the initiating events cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because assuming worst case degradation, the leak would not have exceeded the Technical Specification limit for identified reactor coolant system leakage and mitigating systems were not affected. Inspection Report# : 2004004(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURS FOR OPERATION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with a failure to operate the spent fuel handling machine in accordance with Procedure 78OP-9FX03, "Spent Fuel Handling Machine," Revision 16. There were three instances of this: (1) On October 4, 2002, the spent fuel handling machine operator moved fuel assemblies of two differing weights and was not cognizant of design differences of the fuel assemblies and did not stop fuel movement when the load was greater than 50 lbs. different from expected; (2) On October 4, 2002, the spent fuel handling machine operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly, and (3) later on October 4, 2002, another spent fuel handling operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly. In both Examples (2) and (3), the operators failed to verify the "UP LIMIT" light was on and failed to verify the hoist indicator was at the "UPLIMIT." As a result, in Example (3), the one fuel assembly was damaged. These issues were contrary to Procedure 78OP-9FX03 and resulted in damage to the lower grid assembly of Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products to the environment. The finding is of very low safety significance because all mitigation systems were available during the fuel movement operations and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of human performance. Inspection Report# : 2004011(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PRESCRIBE ADEQUATE INSTRUCTIONS FOR ENTRY INTO ABNORMAL OPERATING PROCEDURE, PVNGS PROCEDURE 40AO-9ZZ22, "FUEL DAMAGE," REVISION 2 THROUGH 6 The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with an inadequate abnormal operating procedure. Specifically, the inspectors determined that Palo Verde Nuclear Generating Station Procedure 40AO-9ZZ22, "Fuel Damage," Revisions 1 through 6, were not adequate in that the entry conditions never required operations personnel to enter the procedure and take actions to mitigate the event. Step 1.1 states, in part, "Section 3.0, Irradiated Fuel Damage may be entered when any of the following conditions exist . . . when equipment or component failures result in any of the following: irradiated fuel assembly contacting a solid structure; bubbles emerging from a spent fuel assembly; bent, twisted, or warped spent fuel assembly; or visual damage to spent fuel pin cladding." Since this abnormal operating procedure was never entered, applicable actions were never considered during the Fuel Assembly P1M316 event. This finding is greater than minor because actions taken in response to fuel handling errors could result in significant fuel cladding damage and

1Q/2005 Inspection Findings - Palo Verde 3 Page 2 of 14 effect the barrier cornerstone. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: FIN Finding POOR MATERIAL CONDITION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a self-revealing finding of very low safety significance (green) associated with the material condition of the spent fuel handling machine. A number of issues related to material condition, which affected spent fuel handling machine operations, was identified. These included intermittent overload and underload conditions with no identified cause, upender limit switches that often failed or required adjustments during fuel movement, an unreliable hydraulic power unit for the upender machine which occasionally resulted in the upender drifting from the vertical position, and the spent fuel handling machine trolley occasionally stopped for no apparent reason. This finding is greater than minor because it had an actual impact resulting in damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS CONTRIBUTED TO DAMAGE TO FUEL ASSEMBLY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to effectively correct conditions adverse to quality that contributed to the damage to irradiated Fuel Assembly P1M316. Specifically, Criterion XVI states, in part, that ". . . conditions adverse to quality, such as malfunctions, deficiencies, deviations, defective material and equipment, and nonconformances are promptly identified and corrected." The licensee failed to effectively correct conditions adverse to quality, which included repeated violations of equipment operating procedures and conduct of operations procedures, as well as long-standing degraded material condition of the fuel handling equipment, that ultimately contributed to the damage of irradiated Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jun 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation SPENT FUEL POOL WATER SIPHON DUE TO CHECK VALVE FAILURE A self-revealing noncited violation of Technical Specification 4.3.2 was identified for the failure to properly maintain a check valve (siphon breaker) between the vacuum drying skid and the spent fuel pool, such that, the spent fuel pool could not be inadvertently drained below 137 feet 6 inches. On May 14, 2004, the check valve failed to open and caused an inadvertent siphoning of approximately 20 gallons from the Unit 3 spent fuel pool to the cask washdown pit. Had the draindown continued, the spent fuel pool level could have decreased below 137 feet 6 inches. This issue was entered into the corrective action program as CRDR 2709518. The finding is greater than minor because it affected the configuration control attribute of the initiating events cornerstone. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PREVENT LOSS OF SPENT FUEL POOL INVENTORY EVENTS THROUGH TIMELY CORRECTIVE ACTIONS

1Q/2005 Inspection Findings - Palo Verde 3 Page 3 of 14 A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to identify the root cause of spent fuel pool inventory loss events and implement corrective actions to preclude recurrence. Specifically, the improper positioning of a fuel pool cleanup suction valve and inadequate level monitoring resulted in three losses of spent fuel pool inventory events. This finding involves problem identification and resolution cross-cutting aspects associated with the failure to identify root causes and implement corrective actions. The issue also involved human performance cross-cutting aspects associated with mispositioned valves and awareness of plant conditions by operations personnel. This issue was entered into the corrective action program as CRDR 2599869. The finding is greater than minor because it affected the configuration control and human performance attributes of the initiating events cornerstone objective. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. Inspection Report# : 2004003(pdf) Mitigating Systems Significance: SL-IV Mar 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A DESIGN CHANGE TO THE FACILITY A Severity Level IV non-cited violation of 10 CFR 50.59 requirements was identified for the failure to obtain a license amendment for a permanent modification to all six station emergency diesel generators. The inspectors determined that there were two modifications performed on the jacket water system of each emergency diesel generator. Condition Report/Disposition Request (CRDR) 130208, in 1993, directed the abandonment of the jacket water surge tank makeup valves on both emergency diesel generators of all three units. A recent modification, Design Modification Work Order 220055 in 2003, removed the surge tank low level alarm on both emergency diesel generators of all three units. The licensee replaced these two automatic actions (automatic makeup and low level alarm) with a manual operator action to fill, as necessary, every 12 hours during rounds. The inspectors reviewed the updated final safety analysis report (UFSAR) and design basis documents, and found that the automatic jacket water surge tank makeup, and the low level alarm, were both shown in UFSAR descriptions, drawings, and design value tables. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the mitigating systems cornerstone attribute of equipment performance, and was repeated for all of the station emergency diesel generators. The issue was determined to result in more than a minimal increase in the consequences of a malfunction of an structure, system, or component important to safety evaluated in the UFSAR, since jacket water leakage could go undetected for up to 12 hours and affect diesel operability. Thus, a license amendment was required. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The lead inspector and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the mitigating system safety function. The licensee entered this issue into its corrective action program as CRDR 2711244. Inspection Report# : 2005002(pdf) Significance: TBD Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf)

1Q/2005 Inspection Findings - Palo Verde 3 Page 4 of 14 Significance: Feb 25, 2005 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for failing to follow a maintenance procedure and associated engineering specification governing scaffold erection near safety-related components. Specifically, the licensee built approximately 85 scaffolds within the 2-inch clearance requirement and did not obtain engineering approval for the scaffolding installed in close proximity to safety-related equipment, as specified in Engineering Design Change 2000-00463. This issue involved human performance crosscutting aspects (personnel) associated with not following work instructions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2779469. The finding is determined to be greater than minor because if left uncorrected, the finding would become a more significant safety concern in that improperly installed scaffolding could impact the availability of mitigating equipment. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse affect to the mitigating equipment. Inspection Report# : 2005002(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW THE OPERABILITY DETERMINATION PROCESS FOR A DEGRADED CONDITION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for failing to follow documented procedures when performing activities affecting quality. Administrative Procedure 40DP-90P26, "Operability Determination," was not followed when performing an operability assessment of emergency diesel generator fuel oil transfer pump Train A following identification of water in the electrical conduit and junction boxes associated with the power supply to the pump. Specifically, licensee personnel failed to consider water intrusion into the electrical conduit for emergency diesel generator fuel oil transfer pump Train A as a condition that could affect the ability of the emergency diesel generator to perform its specified function, and consequently, declared emergency diesel generator Train A operable. The finding involved problem identification and resolution crosscutting aspects in that licensee personnel failed to recognize water intrusion into the conduit box as a potential deficiency that could impact emergency diesel generator operability until prompted by the inspectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2763326. The finding is greater than minor since it is associated with the equipment performance attribute of the mitigating system cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, this finding is determined to have very low safety significance because it only affects the mitigating system cornerstone and was a deficiency that did not result in the actual loss of the safety function of the emergency diesel generator. Inspection Report# : 2004005(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The finding has a potential safety significance greater than very low significance (i.e., Greater than Green) based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURE

1Q/2005 Inspection Findings - Palo Verde 3 Page 5 of 14 The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," involving the failure of engineering and operations personnel to implement requirements in the station's condition reporting and operability determination procedures following identification of a degraded condition. Specifically, engineering personnel did not promptly notify operations personnel of a condition that impacted the safety function of the high pressure safety injection and containment spray systems. In addition, operations personnel did not complete an immediate assessment of operability once they were informed of the degraded condition. This finding had crosscutting aspects associated with problem identification and resolution, since engineering personnel did not forward corrective action program documents regarding the degraded condition to the control room in a timely manner and operations personnel did not complete a prompt operability assessment. This finding also involved crosscutting aspects associated human performance, since engineering and operations personnel did not adequately communicate the status of the engineering department's efforts to review the degraded condition. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding has very low safety significance based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: SL-III Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A CHANGE TO THE FACILITY INVOLVING MAINTAINING A SIGNIFICANT SEGMENT OF CONTAINMENT SUMP SAFETY INJECTION RECIRCULATION PIPING VOID OF WATER The team identified an apparent violation of 10 CFR 50.59 requirements for the licensee's failure to perform a written safety evaluation and receive NRC approval prior to implementing changes to the facility in 1992 which involved draining, and maintaining drained, a significant segment of containment sump safety injection recirculation piping during normal plant operations. This change resulted in the failure to maintain the safety injection piping full of water in accordance with the Updated Final Safety Analysis Report. This represented an unreviewed safety question since it increased the probability of a malfunction of equipment important to safety previously evaluated in the safety analysis report. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the team determined that traditional enforcement applied because this finding may have impacted the NRC's ability to perform its regulatory function. This is an apparent violation pending the results of a predecisional enforcement conference. Inspection Report# : 2004014(pdf) Significance: Oct 05, 2004 Identified By: NRC Item Type: NCV NonCited Violation EXCESSIVE RCS DRAIN RATES USED TO ESTABLISH MIDLOOP CONDITIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in a reactor coolant system level deviation during the reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," Revision 45, was inadequate in that it did not provide reduced drain rates or increased hold points to minimize the excessive difference between actual and indicated reactor coolant system level caused by static head difference between the pressurizer/surge line and the reactor. The finding involved problem identification and resolution crosscutting aspects that contributed to the finding in that engineering documents were available that specified correct drain rates, but these drain rates were not referenced until NRC inspectors questioned the justification of the procedurally allowed values. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2742525. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual indicated level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004005(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTIMELY LUBRICATION OF REACH RODS FOR SAFETY-RELATED MANUAL VALVES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to promptly correct degraded conditions associated with reach rods on safety-related manual valves. The issue involved problem identification and resolution cross-cutting aspects associated with untimely prioritization of work necessary to correct degraded equipment conditions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2328588.

1Q/2005 Inspection Findings - Palo Verde 3 Page 6 of 14 The finding was greater than minor safety significance because if left uncorrected, it could become a more significant safety concern in that the failure to perform maintenance on reach rod assemblies could result in an inability to operate safety-related manual valves. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and there was not a loss of safety function. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation TURBINE DRIVEN AUXILIARY FEEDWATER PUMP GOVERNOR POWER SUPPLY RESISTOR FAILURES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a significant condition adverse to quality. The adverse condition involved failed resistors in the power supply to the turbine driven auxiliary feedwater pump governor control circuits in Units 2 and 3 that had transportability to Unit 1. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. The finding also involved human performance cross-cutting aspects associated with engineering and maintenance personnel not communicating correct technical information. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2746954. The finding was greater than minor because if left uncorrected, it could have become a more significant safety concern in that the Unit 1 turbine driven auxiliary feedwater pump could have experienced an unnecessary failure. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function for the auxiliary feedwater system. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation REACTOR LEVEL ANOMALY WHILE IN REDUCED INVENTORY Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in an unexpected reactor coolant system level anomaly during the Unit 1 reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," did not provide reduced drain rates or increased hold points when only the reactor head vent was utilized to support draining evolutions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2695262. The finding was greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual unexpected level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to assure that significant conditions adverse to quality were promptly identified and corrected. Specifically, maintenance personnel failed to promptly identify that retaining ring slots were not adequately sized to allow the use of the standard lock pins, contributing to the damage to the steam generator nozzle dam diaphragms. Subsequent to the identification, maintenance personnel failed to correct the condition by not implementing the actions recommended by plant engineers. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. That is, this finding was the direct result of licensee personnel's failure to promptly identify and correct a condition adverse to quality. This issue was entered into the licensee's corrective action program as Condition Report/Discrepancy Requests 2686201 and 2686271. This finding was greater than minor because it is associated with the mitigating systems cornerstone and affects reactor coolant system boundary performance. Specifically, the plant operated for an extended period in reduced inventory as a result of not correcting the incompatibility between the nozzle dams and the locking ring. Using Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because the senior reactor analysts' Phase 2 and 3 analyses determined that the increase in

1Q/2005 Inspection Findings - Palo Verde 3 Page 7 of 14 core damage frequency was approximately 3X10-7. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation INEFFECTIVE CORRECTIVE ACTIONS TO ADDRESS AN INADEQUATE SERVICE WATER PIPING INSPECTION PROGRAM Green. The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to promptly correct the lack of an adequate routine inspection and maintenance program for essential spray pond system piping and components. The finding has been entered into the licensee's corrective action program as Condition Report/Disposition Request 2732683. The finding had problem identification and resolution crosscutting aspects associated with engineering personnel not entering deficiencies into their licensee commitment tracking system and not generating a condition report/disposition request. This finding is greater than minor because it affected the reactor safety mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. If left uncorrected the finding could become a more significant safety concern in that inspections of spray pond piping was not performed as committed to in the licensee's Generic Letter 89-13 response. The finding is of very low safety significance because the issue constituted a qualification deficiency that did not result in a loss of function per Generic Letter 91-18, "Information to Licensees Regarding NRC Inspection Manual Section on Resolution of Degraded and Nonconforming Conditions," Revision 1. Inspection Report# : 2004004(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO ADDRESS EMERGENCY DIESEL GENERATOR CIRCUIT FAILURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified because the licensee failed to implement their corrective action program when an emergency diesel-generator excitation circuit failed. The failure precluded the emergency diesel generator from achieving rated voltage within the required time. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function at the time. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW INADEQUATE EMERGENCY OPERATING PROCEDURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," with two examples, was identified because the licensee failed to implement contingency actions when two circuit breakers failed to operate during recovery operations in Units 1 and 3. Specifically, operators deviated from the Emergency Operating Procedure for Loss of Offsite Power/Loss of Forced Circulation when they initiated maintenance on the two failed breakers instead of performing the contingency actions prescribed by the procedure. In addition, for Unit 1, the procedure was inadequate because it did not list all available contingency actions available to operators for restoring power to the electrical bus. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and redundancy existed in other electrical buses. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT CORRECTIVE ACTIONS FOR AUXILIARY FEEDWATER A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified by the team because the licensee failed to implement timely corrective actions to ensure that the feedwater system was operated in a manner that would minimize the possibility of thermally induced vibration that could affect auxiliary feedwater system operability. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the

1Q/2005 Inspection Findings - Palo Verde 3 Page 8 of 14 mitigating systems cornerstone and because no transient occurred that necessitated implementation of the needed corrective actions. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE EMERGENCY OPERATING PROCEDURE FOR AUXILIARY FEEDWATER OPERATION A noncited violation of Technical Specification 5.4.1 was identified because the licensee implemented an inadequate Emergency Operating Procedure. Specifically, the procedure failed to provide direction to maintain turbine-driven auxiliary feedwater pumps operable following a main steam isolation signal. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps did not become inoperable. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MANAGE STATION RISK A noncited violation of 10 CFR 50.65, "Maintenance Rule," was identified because the licensee failed to perform a risk assessment. Specifically, the licensee inappropriately decided to begin draining the Unit 1 turbine-driven auxiliary feedwater pump steam traps first, without addressing the higher risk profile in Unit 2 which resulted from having an inoperable emergency diesel generator. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps were not needed. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT LOOP EMERGENCY OPEARTING PROCEDRE A noncited violation of Technical Specification 5.4.1 was identified because the licensee failed to follow emergency operating procedures. Specifically, the control room operator and an auxiliary operator performed the incorrect steps in Emergency Operating Procedure 40EP-9EO07, "Loss of Offsite Power/Loss of Forced Circulation," Revision 10. The Unit 2, Positive Displacement Charging Pump "E" was temporarily lost due to these human performance errors and resulted in a total loss of Unit 2 charging flow for a short period. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function and no significant delays occurred that adversely impacted operator response to the event. Inspection Report# : 2004013(pdf) Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM A COMPLETE SHUT DOWN COOLING HEAT EXCHANGER TEMPERATURE LOOP CHANNEL CALIBRATION A Severity Level IV noncited violation of Technical Specification 3.3.11 was identified for the failure to include the resistance temperature detectors in the channel calibration for the shutdown cooling heat exchanger temperature instruments. Specifically, prior to the implementation of Improved Technical Specifications, the licensee did not perform testing of the resistance temperature detectors. Following the implementation of Improved Technical Specifications, the licensee did not perform an in-place qualitative assessment of the resistance temperature detectors' behavior. This issue was entered into the corrective action program as CRDR 280178. The failure to perform a complete shutdown cooling heat exchanger temperature loop channel calibration is determined to have greater than minor significance because the licensee's failure to report the condition impacted the NRC's ability to perform it's regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because it only affected the mitigating system cornerstone and the resistance temperature detectors were found to be within calibration. Inspection Report# : 2004003(pdf)

1Q/2005 Inspection Findings - Palo Verde 3 Page 9 of 14 Significance: Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM MONTHLY REVIEWS TO ENSURE EXCESS HOURS HAVE NOT BEEN ASSIGNED The inspectors identified a noncited violation of Technical Specification 5.2.2.d for the failure of authorized individuals to review monthly overtime reports to ensure that excessive hours have not been assigned. Specifically, following the implementation of an electronic reporting system in 2001, the licensee did not ensure that all managers continued to receive and approve the Excess Hours Report. The finding is greater than minor because if left uncorrected it could become a more significant safety concern in that exceeding the NRC Generic Letter 82-02, "Nuclear Power Plant Staff Working Hours," guidelines for overtime limits is a contributor to worker fatigue. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to be of very low safety significance because there were no known actual adverse plant or equipment conditions that could be attributed to worker fatigue. Inspection Report# : 2004003(pdf) Significance: Jun 18, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECTLY TRANSLATE DESIGN INFORMATION INTO THE AS-BUILT CONFIGURATION The team identified a noncited violation for the failure to comply with 10 CFR Part 50, Appendix B, Criterion III, "Design Control." The licensee failed to correctly translate design information into the as-built configuration of the auxiliary feedwater system, in that, 28 feet of exposed auxiliary feedwater minimum flow recirculation line was not protected from a tornado-generated missile for both trains as described in Design Basis Manual, Table 2-1 and Section 10.4.9.1, "Design Basis," of the Final Safety Analysis Report. This issue was entered into the licensee's corrective action program as Condition Report/Deficiency Request 2721947. In accordance with NRC Inspection Manual 0612, Appendix B, "Issue Screening," this finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone, and affected the cornerstone objective to ensure the capability of systems to respond to initiating events. The inspectors evaluated the issue using the Phase 1 Screening Worksheet for the Initiating Events, Mitigating Systems, and Barriers Cornerstones provided in Manual Chapter 0609, Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations." The finding was determined to be of very low safety significance because: the finding did not represent an actual loss of safety function and because the analyst determined that the system would continue to meet its risk-significant function following a postulated tornado initiating event. Inspection Report# : 2004007(pdf) Significance: Apr 19, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO PROVIDE ADEQUATE MAINTENANCE PROCEDURE A noncited violation of Technical Specification 5.4.1.d was identified for an inadequate fire protection program maintenance procedure used to replace underground fire protection post indicator valves. The procedure did not clearly indicate that the preassembled bolts (body to bonnet), as well as other bolts, were to be coated for corrosion protection. This allowed the bolts to corrode, causing failure of the valve and a degradation of the site yard fire main distribution piping and a loss of approximately 278,000 gallons of fire protection water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2700170. This finding is greater than minor because it is associated with the degraded fire protection attribute of the mitigating systems cornerstone and affected the cornerstone objective, which is to ensure the availability, reliability, and capability of systems that mitigate initiating events to prevent reactor accidents. Specifically, the site yard fire main distribution piping was degraded for 45 minutes. Using the Significance Determination Process Phase 1 Worksheet, the finding was determined to have a very low safety significance because it did not involve complete, long-term impairment of the fire protection system. Specifically, the required fire protection water inventory remained above the design reserve level, and the fire main was degraded less than 1 hour. Inspection Report# : 2004005(pdf) Barrier Integrity Significance: Nov 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO INCLUDE VENTS AND DRAINS INTO LOCKED VALVE PROGRAM A noncited violation of Technical Specification Surveillance Requirement 3.6.3.3 was identified for failure to perform the required position

1Q/2005 Inspection Findings - Palo Verde 3 Page 10 of 14 verification for vent and drain valves associated with eight safety injection system penetrations per unit. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2753335. This finding is greater than minor since it is associated with the configuration control attribute of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the containment physical design barrier is preserved to protect the public from radio nuclide releases caused by accidents or events. Using the Phase 1 Worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone, all the valves were found closed, and did not result in an actual open pathway out of the reactor containment. Inspection Report# : 2004005(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE MAIN GENERATOR EXCITATION LIMITER CIRCUIT PROBLEMS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," was identified because the licensee failed to follow the procedure for dispositioning a degraded condition for continued use. Specifically, the licensee failed to place a degraded main generator excitation limiter circuit into the work control process via the appropriate procedure to ensure that it was appropriately evaluated and processed. The finding was greater than minor because it was associated with the human performance attribute of the barrier integrity cornerstone and impacted the cornerstone objective to provide reasonable assurance that physical design barriers, in this case the fuel cladding, protect the public from radio nuclide releases caused by accidents or events. Inspection Report# : 2004013(pdf) Significance: SL-IV Jun 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation CONTAINMENT PURGE PENETRATION NONCONFORMANCE A Severity Level IV noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a nonconforming condition in a timely manner. Specifically, since June 2001, the licensee discontinued implementation of required Technical Specification surveillance testing for the containment purge valves by declaring the valves inoperable and installing blind flanges. This issue was entered into the corrective action program as CRDR 2711167. The finding is greater than minor because the licensee's failure to submit a license amendment to correct the nonconforming condition impacted the NRC's ability to perform its regulatory function. Therefore, this finding was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess the significance of violations that potentially impact or impede the regulatory process, the finding can be assessed using the significance determination process. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone and the installation of blind flanges adequately maintained containment integrity. Inspection Report# : 2004003(pdf) Significance: SL-IV May 21, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROVIDE AN EVALUATION OF A CHANGE TO THE FACILITY AS DESCRIBED IN THE UFSAR, UNDER 10 CFR 50.59 REQUIREMENTS The team identified a Severity Level IV violation of 10 CFR 50.59 requirements for failing to evaluate a modification to spent fuel storage in the spent fuel pools. The team reviewed CRDR 2524176, regarding the lack of a criticality analysis to support the use of rod capture tubes, which hold individual harvested fuel pins, in the spent fuel rack. The team reviewed the licensee's process of storing individual fuel pins, removed from a parent fuel assembly, and placed in rod capture tubes to be located in guide tubes of another host assembly. This resulted in a component that had nuclear fuel pins, of varying enrichment and depletion, stored as a regular fuel assembly in the spent fuel pools. The team noted that Section 9.1 of the UFSAR specifically described the storage of spent fuel in regions based upon fuel assembly initial enrichment, actual burnup, and actual decay time. The UFSAR does not describe the storage of individual pins in these regions. The licensee previously interpreted this as meaning the UFSAR did not prohibit such storage, and would not require consideration of enrichment, burnup, and decay of individual pins. The licensee failed to provide an evaluation of a change to the facility as described in the UFSAR, under 10 CFR 50.59 requirements. The licensee subsequently performed an evaluation of the criticality under station procedure 72DP-9NF01, "Control of SNM Transfer and Inventory," which was found acceptable. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the barrier integrity cornerstone attribute of human performance, and could have represented a more significant issue if left uncorrected. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The team leader and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of

1Q/2005 Inspection Findings - Palo Verde 3 Page 11 of 14 the barrier integrity function. The licensee entered this issue into its corrective action program as CRDR 2711241. Inspection Report# : 2004006(pdf) Emergency Preparedness Significance: TBD Mar 20, 2005 Identified By: NRC Item Type: AV Apparent Violation CHANGE TO RADIOLOGICAL EMERGENCY ACTION LEVELS WHICH DECREASED THE EFFECTIVENESS OF THE EMERGENCY PLAN The inspector identified an apparent violation of 10 CFR 50.54(q) for implementing a change to emergency action levels, which decreased the effectiveness of the emergency plan. Emergency Plan Implementing Procedure 99, "EPIP Standard Appendices," Revision 2, removed from two emergency action levels site boundary exposure rate as measured in the environment as a classifiable condition. Implementation of changes to emergency action levels, which decreased the effectiveness of the emergency plan was a performance deficiency. The finding is more than minor because removal of a classifiable condition from licensee emergency action levels has the potential to impact safety, and licensee implementation of a change to their emergency plan, which decreases the effectiveness of the plan without prior NRC approval, impacts the regulatory process. This finding is an apparent violation of 10 CFR 50.54(q). The licensee has entered this issue into their corrective action system as Condition Report/Disposition Request 2774185. Inspection Report# : 2005011(pdf) Significance: Mar 18, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT THE DEVELOPMENT OF PROTECTIVE ACTION RECOMENDATIONS NOT IN ACCORDANCE WITH FEDERAL GUIDANCE The inspectors identified a noncited violation of 10 CFR 50.54(q). The licensee failed to correct a practice which could result in an evacuation protective action recommendation for segments of the population that would not benefit from evacuation, contrary to federal guidance. This finding is more than minor because it was associated with a cornerstone attribute and affected the emergency preparedness cornerstone objective to ensure the adequate protection of the public health and safety. This finding is of very low safety significance because this practice could result in an increased dose to the evacuating public by evacuating some areas unnecessarily, but would not prevent the notification of appropriate protective action recommendations to those members of the public who did require evacuation. Inspection Report# : 2005002(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN CORRECTIVE LENSES READILY AVAILABLE The team identified a noncited violation of Technical Specification 5.4.1 because a reactor operator failed to have self-contained breathing apparatus corrective lens inserts readily available while on duty. The corrective lenses were located in a locker outside of the control room envelope. The operator had not been trained on the requirement. The finding is greater than minor because it was associated with an Emergency Preparedness cornerstone attribute (emergency response organization readiness) and it affected the associated cornerstone objective because the failure to have corrective lenses could have impaired the operator's ability to see the control boards and take proper actions. Using the Emergency Preparedness Significance Determination Process, the team determined the finding to be of very low safety significance because: (1) it was a failure to comply with a technical specification-required procedure, but (2) it did not affect a risk-significant planning standard. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE PROCEDURES FOR IMPLEMENTATION OF AN EMERGENCY ACTION LEVEL The examiners identified a noncited violation of 10 CFR Part 50, Appendix E, IV.B, for inadequate procedures for implementation of an emergency action level. Emergency Action Level 3-13 requires that an Alert be declared if "major damage to irradiated fuel" is accompanied

1Q/2005 Inspection Findings - Palo Verde 3 Page 12 of 14 by a "valid high radiation alarm on the associated radiation monitor." However, the phrase "major damage to irradiated fuel" is not defined in any site procedure, nor is it defined, clarified, or addressed through operator training such that operators would know when conditions meet the threshold for declaring an Alert as a result of damage to irradiated fuel. This deficiency was evidenced during the examination by the fact that the examination authors, examination reviewers, and five of the seven license applicants taking the examination did not recognize conditions that warranted declaring an Alert using Emergency Action Level 3-13. The licensee was evaluating a clarifying change to Emergency Action Level 3-13 and its bases documents and has documented this issue in Condition Report/Disposition Request 2761670. The finding is a performance deficiency in that the licensee failed to identify that Emergency Action Level 3-13 would not be properly implemented without objectively defining the phrase "major damage to irradiated fuel" in either plant procedures or operator training. The finding is more than minor because it affects the Emergency Preparedness Cornerstone of procedural quality in that it could result in a failure to declare an Alert emergency classification when conditions warrant. The finding is of very low safety significance since it was a failure to comply with a regulatory requirement associated with a Risk-Significant Planning Standard that did not result in the loss or degradation of that Risk-Significant Planning Standard function. Inspection Report# : 2004301(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation TECHNICAL SUPPORT CENTER UNAVAILABLE A noncited violation of 10 CFR 50.49(q) was identified because the licensee failed to follow the emergency plan when they did not adequately maintain facilities required for emergency response. Specifically, the Technical Support Center (TSC) EDG failed because a test switch was not returned to its proper position following maintenance 6 days prior to the event. As a result, the emergency response organization assembled in the alternate TSC. This resulted in some confusion and posed some unique challenges to the emergency response organization. The finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 8 is considered a failure to comply with planning standard 8 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT EMERGENCY PLAN A noncited violation of 10 CFR 50.49(q) was identified because the licensee failed to follow the emergency plan when they did not ensure that adequate command and control was established during the event. Specifically, the licensee did not follow Emergency Plan Implementing Procedure 1, "Satellite Technical Support Center Actions," which requires that for multiple unit events, the Unit 1 shift manager is responsible for initially classifying and declaring the emergency and assuming the position of the on-shift emergency coordinator. As a result, each of the units' respective shift managers initially assumed the role of emergency coordinator and resulted in notification irregularities to state and local officials. The finding is more than minor because it is related to the emergency preparedness cornerstone attribute of Response organization performance, and affects the cornerstone objective in that command and control challenges resulting in inaccurate communications to the offsite officials could potentially affect the ability to ensure that adequate measures would be taken to protect the public health and safety. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTILMELY AUGMENTATION OF ERGENCY PERSONNEL A noncited violation of 10 CFR 50.54(q) was identified because the licensee failed to follow the emergency plan. Specifically, the licensee failed to meet minimum staffing goals of Table 1, "Minimum Staffing Requirements for PVNGS for Nuclear Power Plant Emergencies" following the Alert declaration on June 14, 2004. This finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 2 is considered a failure to comply with planning standard 2 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf)

1Q/2005 Inspection Findings - Palo Verde 3 Page 13 of 14 Occupational Radiation Safety Public Radiation Safety Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SHIP RADIOACTIVE MATERIAL CORRECTLY The team reviewed a self-revealing, non-cited violation of 10 CFR 71.5, which occurred when the licensee failed to ship radioactive material correctly. A radioactive shipment classified as an "excepted package-limited quantity" exceeded the external dose rate limitation of 0.5 millirem per hour because licensee personnel failed to ensure that the package contents could not shift during transportation. The package recipient identified dose rates of 0.8 millirems per hour on the exterior surface of the package and notified the licensee of the problem. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to correctly ship radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. However, this finding cannot be evaluated by the Public Radiation Safety Significance Determination Process because it does not involve radioactive shipments classified as Schedule 5 through 11, as described in NUREG-1660, and it does not fit traditional enforcement. Therefore, the finding was reviewed by NRC management and determined to be of very low safety significance. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the licensee's shipper failed to ensure that the package contents could not shift. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CONTROL RADIOACTIVE MATERIAL The team reviewed a self-revealing, non-cited violation of Technical Specification 5.4.1, which occurred when the licensee failed to prevent radioactive material from leaving the radiological controlled area and the protected area. A tape measure worn on the lanyard of a radiation protection technician was not evaluated for the presence of radioactive material before its release from the radiological controlled area. The licensee discovered the radioactive material when the individual was whole body counted; however, the discovery was fortuitous because the licensee's procedural guidance did not specify that items, such as the lanyard, be worn consistently during the whole body counting process. The quantity of radioactive material on the tape measure would have been identified by the licensee's cabinet radiation detectors had the radiation protection technician used one as required. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to control radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the radiation protection technician failed to use the established process to evaluate the tool for radioactive contamination. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Physical Protection Physical Protection information not publicly available. Miscellaneous Significance: N/A May 21, 2004 Identified By: NRC Item Type: FIN Finding

1Q/2005 Inspection Findings - Palo Verde 3 Page 14 of 14 IDENTIFICATION AND RESOLUTION OF PROBLEMS The team concluded that the licensee was generally effective at identifying problems and processing them through the corrective action program. The licensee effectively prioritized and evaluated issues with a few exceptions. The team identified examples where the licensee had not evaluated identified issues for proper compliance with 10 CFR 50.59 requirements. Additionally, in some cases, corrective actions were not timely or fully documented. Licensee audits and assessments were found to be effective except for one example involving maintenance rule application to radiation monitors. On the basis of interviews conducted during this inspection, workers at the site felt free to input safety findings into the corrective action program. Inspection Report# : 2004006(pdf) Last modified : June 17, 2005

2Q/2005 Inspection Findings - Palo Verde 3 Page 1 of 11 Palo Verde 3 2Q/2005 Plant Inspection Findings Initiating Events Significance: Sep 30, 2004 Identified By: Self Disclosing Item Type: NCV NonCited Violation FAILURE TO REMOVE PIPE SUPPORT LEADS TO RCS PRESSURE BOUNDARY LEAK Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for the failure to implement a modification. The modification should have removed a pipe support associated with a high pressure safety injection system drain line. The failure to remove the pipe support, combined with high vibrations, resulted in a reactor coolant system pressure boundary leak from a cracked socket weld upstream of high pressure safety injection header drain Valve 1-P-SIA-V056. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2669474. The finding is greater than minor since it is associated with the equipment performance and design control attributes of the initiating events cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because assuming worst case degradation, the leak would not have exceeded the Technical Specification limit for identified reactor coolant system leakage and mitigating systems were not affected. Inspection Report# : 2004004(pdf) Mitigating Systems Significance: May 17, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT A CONDITION ADVERSE TO QUALITY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to identify and correct a deficiency in the method of testing the auxiliary feedwater pump discharge check valves. Specifically, in 1998 the licensee identified the need to test the auxiliary feedwater pump Train B discharge check valve for leak tightness, but failed to implement the appropriate corrective actions to incorporate testing into Procedure 73ST-9XI38, "AF Pumps Discharge Check Valves - Inservice Test." This issue involved problem identification and resolution crosscutting aspects associated with the failure to implement timely corrective actions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2800972. The finding is greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function Inspection Report# : 2005003(pdf) Significance: SL-IV Mar 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A DESIGN CHANGE TO THE FACILITY A Severity Level IV non-cited violation of 10 CFR 50.59 requirements was identified for the failure to obtain a license amendment for a permanent modification to all six station emergency diesel generators. The inspectors determined that there were two modifications performed on the jacket water system of each emergency diesel generator. Condition Report/Disposition Request (CRDR) 130208, in 1993, directed the abandonment of the jacket water surge tank makeup valves on both emergency diesel generators of all three units. A recent modification, Design Modification Work Order 220055 in 2003, removed the surge tank low level alarm on both emergency diesel generators of all three units. The licensee replaced these two automatic actions (automatic makeup and low level alarm) with a manual operator action to fill, as necessary, every 12 hours during rounds. The inspectors reviewed the updated final safety analysis report (UFSAR) and design basis documents, and found that the automatic jacket water surge tank makeup, and the low level alarm, were both shown in UFSAR descriptions, drawings, and design value tables. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the mitigating

2Q/2005 Inspection Findings - Palo Verde 3 Page 2 of 11 systems cornerstone attribute of equipment performance, and was repeated for all of the station emergency diesel generators. The issue was determined to result in more than a minimal increase in the consequences of a malfunction of an structure, system, or component important to safety evaluated in the UFSAR, since jacket water leakage could go undetected for up to 12 hours and affect diesel operability. Thus, a license amendment was required. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The lead inspector and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the mitigating system safety function. The licensee entered this issue into its corrective action program as CRDR 2711244. Inspection Report# : 2005002(pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Feb 25, 2005 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for failing to follow a maintenance procedure and associated engineering specification governing scaffold erection near safety-related components. Specifically, the licensee built approximately 85 scaffolds within the 2-inch clearance requirement and did not obtain engineering approval for the scaffolding installed in close proximity to safety-related equipment, as specified in Engineering Design Change 2000-00463. This issue involved human performance crosscutting aspects (personnel) associated with not following work instructions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2779469. The finding is determined to be greater than minor because if left uncorrected, the finding would become a more significant safety concern in that improperly installed scaffolding could impact the availability of mitigating equipment. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse affect to the mitigating equipment. Inspection Report# : 2005002(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW THE OPERABILITY DETERMINATION PROCESS FOR A DEGRADED CONDITION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for failing to follow documented procedures when performing activities affecting quality. Administrative Procedure 40DP-90P26, "Operability Determination," was not followed when performing an operability assessment of emergency diesel generator fuel oil transfer pump Train A following identification of water in the electrical conduit and junction boxes associated with the power supply to the pump. Specifically, licensee personnel failed to consider water intrusion into the electrical conduit for emergency diesel generator fuel oil transfer pump Train A as a condition that could affect the ability of the emergency diesel generator to perform its specified function, and consequently, declared emergency diesel generator Train A operable. The finding involved problem identification and resolution crosscutting aspects in that licensee personnel failed to recognize water intrusion into the conduit box as a potential deficiency that could impact emergency diesel generator operability until prompted by the inspectors. This issue was entered into the licensee's corrective action program as Condition

2Q/2005 Inspection Findings - Palo Verde 3 Page 3 of 11 Report/Disposition Request 2763326. The finding is greater than minor since it is associated with the equipment performance attribute of the mitigating system cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, this finding is determined to have very low safety significance because it only affects the mitigating system cornerstone and was a deficiency that did not result in the actual loss of the safety function of the emergency diesel generator. Inspection Report# : 2004005(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURE The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," involving the failure of engineering and operations personnel to implement requirements in the station's condition reporting and operability determination procedures following identification of a degraded condition. Specifically, engineering personnel did not promptly notify operations personnel of a condition that impacted the safety function of the high pressure safety injection and containment spray systems. In addition, operations personnel did not complete an immediate assessment of operability once they were informed of the degraded condition. This finding had crosscutting aspects associated with problem identification and resolution, since engineering personnel did not forward corrective action program documents regarding the degraded condition to the control room in a timely manner and operations personnel did not complete a prompt operability assessment. This finding also involved crosscutting aspects associated human performance, since engineering and operations personnel did not adequately communicate the status of the engineering department's efforts to review the degraded condition. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding has very low safety significance based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: SL-III Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A CHANGE TO THE FACILITY INVOLVING MAINTAINING A SIGNIFICANT SEGMENT OF CONTAINMENT SUMP SAFETY INJECTION RECIRCULATION PIPING VOID OF WATER The team identified an apparent violation of 10 CFR 50.59 requirements for the licensee's failure to perform a written safety evaluation and receive NRC approval prior to implementing changes to the facility in 1992 which involved draining, and maintaining drained, a significant segment of containment sump safety injection recirculation piping during normal plant operations. This change resulted in the failure to maintain the safety injection piping full of water in accordance with the Updated Final Safety Analysis Report. This represented an unreviewed safety question since it increased the probability of a malfunction of equipment important to safety previously evaluated in the safety analysis report. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the team determined that traditional enforcement applied because this finding may have impacted the NRC's ability to perform its regulatory function. This is an apparent violation pending the results of a predecisional enforcement conference.

2Q/2005 Inspection Findings - Palo Verde 3 Page 4 of 11 Inspection Report# : 2004014(pdf) Significance: Oct 05, 2004 Identified By: NRC Item Type: NCV NonCited Violation EXCESSIVE RCS DRAIN RATES USED TO ESTABLISH MIDLOOP CONDITIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in a reactor coolant system level deviation during the reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," Revision 45, was inadequate in that it did not provide reduced drain rates or increased hold points to minimize the excessive difference between actual and indicated reactor coolant system level caused by static head difference between the pressurizer/surge line and the reactor. The finding involved problem identification and resolution crosscutting aspects that contributed to the finding in that engineering documents were available that specified correct drain rates, but these drain rates were not referenced until NRC inspectors questioned the justification of the procedurally allowed values. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2742525. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual indicated level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004005(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTIMELY LUBRICATION OF REACH RODS FOR SAFETY-RELATED MANUAL VALVES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to promptly correct degraded conditions associated with reach rods on safety-related manual valves. The issue involved problem identification and resolution cross-cutting aspects associated with untimely prioritization of work necessary to correct degraded equipment conditions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2328588. The finding was greater than minor safety significance because if left uncorrected, it could become a more significant safety concern in that the failure to perform maintenance on reach rod assemblies could result in an inability to operate safety-related manual valves. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and there was not a loss of safety function. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation TURBINE DRIVEN AUXILIARY FEEDWATER PUMP GOVERNOR POWER SUPPLY RESISTOR FAILURES Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct a significant condition adverse to quality. The adverse condition involved failed resistors in the power supply to the turbine driven auxiliary feedwater pump governor control circuits in Units 2 and 3 that had transportability to Unit 1. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. The finding also involved human performance cross-cutting aspects associated with engineering and maintenance personnel not communicating correct technical information. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2746954. The finding was greater than minor because if left uncorrected, it could have become a more significant safety concern in that the Unit 1 turbine driven auxiliary feedwater pump could have experienced an unnecessary failure. This finding is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. Using the Phase 1 worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function for the auxiliary feedwater system. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004

2Q/2005 Inspection Findings - Palo Verde 3 Page 5 of 11 Identified By: Self Disclosing Item Type: NCV NonCited Violation REACTOR LEVEL ANOMALY WHILE IN REDUCED INVENTORY Green. A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in an unexpected reactor coolant system level anomaly during the Unit 1 reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," did not provide reduced drain rates or increased hold points when only the reactor head vent was utilized to support draining evolutions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2695262. The finding was greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual unexpected level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to assure that significant conditions adverse to quality were promptly identified and corrected. Specifically, maintenance personnel failed to promptly identify that retaining ring slots were not adequately sized to allow the use of the standard lock pins, contributing to the damage to the steam generator nozzle dam diaphragms. Subsequent to the identification, maintenance personnel failed to correct the condition by not implementing the actions recommended by plant engineers. The finding involved problem identification and resolution cross-cutting aspects associated with engineering personnel not performing an adequate extent of condition review. That is, this finding was the direct result of licensee personnel's failure to promptly identify and correct a condition adverse to quality. This issue was entered into the licensee's corrective action program as Condition Report/Discrepancy Requests 2686201 and 2686271. This finding was greater than minor because it is associated with the mitigating systems cornerstone and affects reactor coolant system boundary performance. Specifically, the plant operated for an extended period in reduced inventory as a result of not correcting the incompatibility between the nozzle dams and the locking ring. Using Manual Chapter 0609, "Significance Determination Process," this finding is determined to have very low safety significance because the senior reactor analysts' Phase 2 and 3 analyses determined that the increase in core damage frequency was approximately 3X10-7. Inspection Report# : 2004004(pdf) Significance: Sep 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation INEFFECTIVE CORRECTIVE ACTIONS TO ADDRESS AN INADEQUATE SERVICE WATER PIPING INSPECTION PROGRAM Green. The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to promptly correct the lack of an adequate routine inspection and maintenance program for essential spray pond system piping and components. The finding has been entered into the licensee's corrective action program as Condition Report/Disposition Request 2732683. The finding had problem identification and resolution crosscutting aspects associated with engineering personnel not entering deficiencies into their licensee commitment tracking system and not generating a condition report/disposition request. This finding is greater than minor because it affected the reactor safety mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. If left uncorrected the finding could become a more significant safety concern in that inspections of spray pond piping was not performed as committed to in the licensee's Generic Letter 89-13 response. The finding is of very low safety significance because the issue constituted a qualification deficiency that did not result in a loss of function per Generic Letter 91-18, "Information to Licensees Regarding NRC Inspection Manual Section on Resolution of Degraded and Nonconforming Conditions," Revision 1. Inspection Report# : 2004004(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO ADDRESS EMERGENCY DIESEL GENERATOR CIRCUIT FAILURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified because the licensee failed to implement their corrective action program when an emergency diesel-generator excitation circuit failed. The failure precluded the emergency

2Q/2005 Inspection Findings - Palo Verde 3 Page 6 of 11 diesel generator from achieving rated voltage within the required time. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function at the time. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW INADEQUATE EMERGENCY OPERATING PROCEDURE A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," with two examples, was identified because the licensee failed to implement contingency actions when two circuit breakers failed to operate during recovery operations in Units 1 and 3. Specifically, operators deviated from the Emergency Operating Procedure for Loss of Offsite Power/Loss of Forced Circulation when they initiated maintenance on the two failed breakers instead of performing the contingency actions prescribed by the procedure. In addition, for Unit 1, the procedure was inadequate because it did not list all available contingency actions available to operators for restoring power to the electrical bus. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and redundancy existed in other electrical buses. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT CORRECTIVE ACTIONS FOR AUXILIARY FEEDWATER A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified by the team because the licensee failed to implement timely corrective actions to ensure that the feedwater system was operated in a manner that would minimize the possibility of thermally induced vibration that could affect auxiliary feedwater system operability. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because no transient occurred that necessitated implementation of the needed corrective actions. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE EMERGENCY OPERATING PROCEDURE FOR AUXILIARY FEEDWATER OPERATION A noncited violation of Technical Specification 5.4.1 was identified because the licensee implemented an inadequate Emergency Operating Procedure. Specifically, the procedure failed to provide direction to maintain turbine-driven auxiliary feedwater pumps operable following a main steam isolation signal. The finding was greater than minor because it was associated with the equipment performance attributes of the mitigating systems cornerstone and affected the associated cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps did not become inoperable. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MANAGE STATION RISK A noncited violation of 10 CFR 50.65, "Maintenance Rule," was identified because the licensee failed to perform a risk assessment. Specifically, the licensee inappropriately decided to begin draining the Unit 1 turbine-driven auxiliary feedwater pump steam traps first, without addressing the higher risk profile in Unit 2 which resulted from having an inoperable emergency diesel generator. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and because the turbine-driven auxiliary feedwater pumps were not needed. Inspection Report# : 2004013(pdf)

2Q/2005 Inspection Findings - Palo Verde 3 Page 7 of 11 Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT LOOP EMERGENCY OPEARTING PROCEDRE A noncited violation of Technical Specification 5.4.1 was identified because the licensee failed to follow emergency operating procedures. Specifically, the control room operator and an auxiliary operator performed the incorrect steps in Emergency Operating Procedure 40EP-9EO07, "Loss of Offsite Power/Loss of Forced Circulation," Revision 10. The Unit 2, Positive Displacement Charging Pump "E" was temporarily lost due to these human performance errors and resulted in a total loss of Unit 2 charging flow for a short period. The finding was greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affected the cornerstone objective of equipment availability. The finding had very low significance because it only affected the mitigating systems cornerstone and did not result in the actual loss of a safety function and no significant delays occurred that adversely impacted operator response to the event. Inspection Report# : 2004013(pdf) Barrier Integrity Significance: Nov 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO INCLUDE VENTS AND DRAINS INTO LOCKED VALVE PROGRAM A noncited violation of Technical Specification Surveillance Requirement 3.6.3.3 was identified for failure to perform the required position verification for vent and drain valves associated with eight safety injection system penetrations per unit. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2753335. This finding is greater than minor since it is associated with the configuration control attribute of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the containment physical design barrier is preserved to protect the public from radio nuclide releases caused by accidents or events. Using the Phase 1 Worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone, all the valves were found closed, and did not result in an actual open pathway out of the reactor containment. Inspection Report# : 2004005(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE MAIN GENERATOR EXCITATION LIMITER CIRCUIT PROBLEMS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Procedures," was identified because the licensee failed to follow the procedure for dispositioning a degraded condition for continued use. Specifically, the licensee failed to place a degraded main generator excitation limiter circuit into the work control process via the appropriate procedure to ensure that it was appropriately evaluated and processed. The finding was greater than minor because it was associated with the human performance attribute of the barrier integrity cornerstone and impacted the cornerstone objective to provide reasonable assurance that physical design barriers, in this case the fuel cladding, protect the public from radio nuclide releases caused by accidents or events. Inspection Report# : 2004013(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURS FOR OPERATION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with a failure to operate the spent fuel handling machine in accordance with Procedure 78OP-9FX03, "Spent Fuel Handling Machine," Revision 16. There were three instances of this: (1) On October 4, 2002, the spent fuel handling machine operator moved fuel assemblies of two differing weights and was not cognizant of design differences of the fuel assemblies and did not stop fuel movement when the load was greater than 50 lbs. different from expected; (2) On October 4, 2002, the spent fuel handling machine operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly, and (3) later on October 4, 2002, another spent fuel handling operator failed to verify that the hoist was in its full up position prior to moving a spent fuel assembly. In both Examples (2) and (3), the operators failed to verify the "UP LIMIT" light was on and failed to verify the hoist indicator was at the "UPLIMIT." As a result, in Example (3), the one fuel assembly was damaged. These issues were contrary to

2Q/2005 Inspection Findings - Palo Verde 3 Page 8 of 11 Procedure 78OP-9FX03 and resulted in damage to the lower grid assembly of Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products to the environment. The finding is of very low safety significance because all mitigation systems were available during the fuel movement operations and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of human performance. Inspection Report# : 2004011(pdf) Significance: Aug 30, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PRESCRIBE ADEQUATE INSTRUCTIONS FOR ENTRY INTO ABNORMAL OPERATING PROCEDURE, PVNGS PROCEDURE 40AO-9ZZ22, "FUEL DAMAGE," REVISION 2 THROUGH 6 The inspectors identified a noncited violation of Technical Specification 5.4.1 associated with an inadequate abnormal operating procedure. Specifically, the inspectors determined that Palo Verde Nuclear Generating Station Procedure 40AO-9ZZ22, "Fuel Damage," Revisions 1 through 6, were not adequate in that the entry conditions never required operations personnel to enter the procedure and take actions to mitigate the event. Step 1.1 states, in part, "Section 3.0, Irradiated Fuel Damage may be entered when any of the following conditions exist . . . when equipment or component failures result in any of the following: irradiated fuel assembly contacting a solid structure; bubbles emerging from a spent fuel assembly; bent, twisted, or warped spent fuel assembly; or visual damage to spent fuel pin cladding." Since this abnormal operating procedure was never entered, applicable actions were never considered during the Fuel Assembly P1M316 event. This finding is greater than minor because actions taken in response to fuel handling errors could result in significant fuel cladding damage and effect the barrier cornerstone. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: FIN Finding POOR MATERIAL CONDITION OF THE SPENT FUEL HANDLING MACHINE The inspectors identified a self-revealing finding of very low safety significance (green) associated with the material condition of the spent fuel handling machine. A number of issues related to material condition, which affected spent fuel handling machine operations, was identified. These included intermittent overload and underload conditions with no identified cause, upender limit switches that often failed or required adjustments during fuel movement, an unreliable hydraulic power unit for the upender machine which occasionally resulted in the upender drifting from the vertical position, and the spent fuel handling machine trolley occasionally stopped for no apparent reason. This finding is greater than minor because it had an actual impact resulting in damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. Inspection Report# : 2004011(pdf) Significance: Jul 08, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS CONTRIBUTED TO DAMAGE TO FUEL ASSEMBLY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to effectively correct conditions adverse to quality that contributed to the damage to irradiated Fuel Assembly P1M316. Specifically, Criterion XVI states, in part, that ". . . conditions adverse to quality, such as malfunctions, deficiencies, deviations, defective material and equipment, and nonconformances are promptly identified and corrected." The licensee failed to effectively correct conditions adverse to quality, which included repeated violations of equipment operating procedures and conduct of operations procedures, as well as long-standing degraded material condition of the fuel handling equipment, that ultimately contributed to the damage of irradiated Fuel Assembly P1M316. This finding is greater than minor because it had an actual impact of damage to an irradiated fuel assembly and, therefore, could be reasonably viewed as a precursor to a significant event. If the fuel cladding had failed, it could have caused a release of fission products. The finding is of very low safety significance because all mitigation systems were available and should have prevented an unplanned release of radioactive material to the environment above the limits of 10 CFR Part 100. This finding also had crosscutting aspects in the area of problem identification and resolution. Inspection Report# : 2004011(pdf)

2Q/2005 Inspection Findings - Palo Verde 3 Page 9 of 11 Emergency Preparedness Significance: SL-III Mar 20, 2005 Identified By: NRC Item Type: AV Apparent Violation CHANGE TO RADIOLOGICAL EMERGENCY ACTION LEVELS WHICH DECREASED THE EFFECTIVENESS OF THE EMERGENCY PLAN The inspector identified an apparent violation of 10 CFR 50.54(q) for implementing a change to emergency action levels, which decreased the effectiveness of the emergency plan. Emergency Plan Implementing Procedure 99, "EPIP Standard Appendices," Revision 2, removed from two emergency action levels site boundary exposure rate as measured in the environment as a classifiable condition. Implementation of changes to emergency action levels, which decreased the effectiveness of the emergency plan was a performance deficiency. The finding is more than minor because removal of a classifiable condition from licensee emergency action levels has the potential to impact safety, and licensee implementation of a change to their emergency plan, which decreases the effectiveness of the plan without prior NRC approval, impacts the regulatory process. This finding is an apparent violation of 10 CFR 50.54(q). The licensee has entered this issue into their corrective action system as Condition Report/Disposition Request 2774185. Inspection Report# : 2005011(pdf) Significance: Mar 18, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT THE DEVELOPMENT OF PROTECTIVE ACTION RECOMENDATIONS NOT IN ACCORDANCE WITH FEDERAL GUIDANCE The inspectors identified a noncited violation of 10 CFR 50.54(q). The licensee failed to correct a practice which could result in an evacuation protective action recommendation for segments of the population that would not benefit from evacuation, contrary to federal guidance. This finding is more than minor because it was associated with a cornerstone attribute and affected the emergency preparedness cornerstone objective to ensure the adequate protection of the public health and safety. This finding is of very low safety significance because this practice could result in an increased dose to the evacuating public by evacuating some areas unnecessarily, but would not prevent the notification of appropriate protective action recommendations to those members of the public who did require evacuation. Inspection Report# : 2005002(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN CORRECTIVE LENSES READILY AVAILABLE The team identified a noncited violation of Technical Specification 5.4.1 because a reactor operator failed to have self-contained breathing apparatus corrective lens inserts readily available while on duty. The corrective lenses were located in a locker outside of the control room envelope. The operator had not been trained on the requirement. The finding is greater than minor because it was associated with an Emergency Preparedness cornerstone attribute (emergency response organization readiness) and it affected the associated cornerstone objective because the failure to have corrective lenses could have impaired the operator's ability to see the control boards and take proper actions. Using the Emergency Preparedness Significance Determination Process, the team determined the finding to be of very low safety significance because: (1) it was a failure to comply with a technical specification-required procedure, but (2) it did not affect a risk-significant planning standard. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE PROCEDURES FOR IMPLEMENTATION OF AN EMERGENCY ACTION LEVEL The examiners identified a noncited violation of 10 CFR Part 50, Appendix E, IV.B, for inadequate procedures for implementation of an emergency action level. Emergency Action Level 3-13 requires that an Alert be declared if "major damage to irradiated fuel" is accompanied by a "valid high radiation alarm on the associated radiation monitor." However, the phrase "major damage to irradiated fuel" is not defined in any site procedure, nor is it defined, clarified, or addressed through operator training such that operators would know when conditions meet the threshold for declaring an Alert as a result of damage to irradiated fuel. This deficiency was evidenced during the examination by the fact that the examination authors, examination reviewers, and five of the seven license applicants taking the examination did not recognize conditions that warranted declaring an Alert using Emergency Action Level 3-13. The licensee was evaluating a clarifying change to Emergency Action

2Q/2005 Inspection Findings - Palo Verde 3 Page 10 of 11 Level 3-13 and its bases documents and has documented this issue in Condition Report/Disposition Request 2761670. The finding is a performance deficiency in that the licensee failed to identify that Emergency Action Level 3-13 would not be properly implemented without objectively defining the phrase "major damage to irradiated fuel" in either plant procedures or operator training. The finding is more than minor because it affects the Emergency Preparedness Cornerstone of procedural quality in that it could result in a failure to declare an Alert emergency classification when conditions warrant. The finding is of very low safety significance since it was a failure to comply with a regulatory requirement associated with a Risk-Significant Planning Standard that did not result in the loss or degradation of that Risk-Significant Planning Standard function. Inspection Report# : 2004301(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation TECHNICAL SUPPORT CENTER UNAVAILABLE A noncited violation of 10 CFR 50.54(q) was identified because the licensee failed to follow the emergency plan when they did not adequately maintain facilities required for emergency response. Specifically, the Technical Support Center (TSC) EDG failed because a test switch was not returned to its proper position following maintenance 6 days prior to the event. As a result, the emergency response organization assembled in the alternate TSC. This resulted in some confusion and posed some unique challenges to the emergency response organization. The finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 8 is considered a failure to comply with planning standard 8 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT EMERGENCY PLAN A noncited violation of 10 CFR 50.54(q) was identified because the licensee failed to follow the emergency plan when they did not ensure that adequate command and control was established during the event. Specifically, the licensee did not follow Emergency Plan Implementing Procedure 1, "Satellite Technical Support Center Actions," which requires that for multiple unit events, the Unit 1 shift manager is responsible for initially classifying and declaring the emergency and assuming the position of the on-shift emergency coordinator. As a result, each of the units' respective shift managers initially assumed the role of emergency coordinator and resulted in notification irregularities to state and local officials. The finding is more than minor because it is related to the emergency preparedness cornerstone attribute of Response organization performance, and affects the cornerstone objective in that command and control challenges resulting in inaccurate communications to the offsite officials could potentially affect the ability to ensure that adequate measures would be taken to protect the public health and safety. Inspection Report# : 2004013(pdf) Significance: Sep 24, 2004 Identified By: NRC Item Type: NCV NonCited Violation UNTILMELY AUGMENTATION OF ERGENCY PERSONNEL A noncited violation of 10 CFR 50.54(q) was identified because the licensee failed to follow the emergency plan. Specifically, the licensee failed to meet minimum staffing goals of Table 1, "Minimum Staffing Requirements for PVNGS for Nuclear Power Plant Emergencies" following the Alert declaration on June 14, 2004. This finding was evaluated using Inspection Manual Chapter 0609, "Significance Determination Process," Appendix B, Sheet 2 - Actual Event Implementation Problem. Failure to implement the requirements of the Emergency plan associated with emergency planning standard 2 is considered a failure to comply with planning standard 2 during an actual event implementation. The event was a declared Alert, but was not a failure to implement a risk significant planning standard, as defined in Inspection Manual Chapter MC 0609 Appendix B, §2.0. Therefore, the finding is of very low safety significance. Inspection Report# : 2004013(pdf) Occupational Radiation Safety

2Q/2005 Inspection Findings - Palo Verde 3 Page 11 of 11 Public Radiation Safety Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SHIP RADIOACTIVE MATERIAL CORRECTLY The team reviewed a self-revealing, non-cited violation of 10 CFR 71.5, which occurred when the licensee failed to ship radioactive material correctly. A radioactive shipment classified as an "excepted package-limited quantity" exceeded the external dose rate limitation of 0.5 millirem per hour because licensee personnel failed to ensure that the package contents could not shift during transportation. The package recipient identified dose rates of 0.8 millirems per hour on the exterior surface of the package and notified the licensee of the problem. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to correctly ship radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. However, this finding cannot be evaluated by the Public Radiation Safety Significance Determination Process because it does not involve radioactive shipments classified as Schedule 5 through 11, as described in NUREG-1660, and it does not fit traditional enforcement. Therefore, the finding was reviewed by NRC management and determined to be of very low safety significance. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the licensee's shipper failed to ensure that the package contents could not shift. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CONTROL RADIOACTIVE MATERIAL The team reviewed a self-revealing, non-cited violation of Technical Specification 5.4.1, which occurred when the licensee failed to prevent radioactive material from leaving the radiological controlled area and the protected area. A tape measure worn on the lanyard of a radiation protection technician was not evaluated for the presence of radioactive material before its release from the radiological controlled area. The licensee discovered the radioactive material when the individual was whole body counted; however, the discovery was fortuitous because the licensee's procedural guidance did not specify that items, such as the lanyard, be worn consistently during the whole body counting process. The quantity of radioactive material on the tape measure would have been identified by the licensee's cabinet radiation detectors had the radiation protection technician used one as required. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to control radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the radiation protection technician failed to use the established process to evaluate the tool for radioactive contamination. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : August 24, 2005

3Q/2005 Inspection Findings - Palo Verde 3 Page 1 of 6 Palo Verde 3 3Q/2005 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM LICENSING DOCUMENT CHANGE REQUET AND 10 CFR 50.59 SCREENING FOR ABANDONMENT OF THE BORONOMETER The inspectors identified a noncited violation of 10 CFR Part50, AppendixB, CriterionXVI, "Corrective Action," for the failure to correct a discrepancy between the current condition of the boronometer and the required configuration described in the Updated Final Safety Analysis Report. Specifically, in April 2003 the licensee identified the need to perform a Licensing Document Change Request and a corresponding 10 CFR 50.59 screening due to the abandonment of the Updated Final Safety Analysis Report required boronometer, but failed to implement corrective actions to ensure that the Licensing Document Change Request and 10CFR 50.59 screening were performed. This issue involved problem identification and resolution crosscutting aspects associated with engineering personnel implementing timely corrective actions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2823704. The finding is greater than minor because it was associated with the design control performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter0609, "Significance Determination Process," Phase1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function (Section 4OA2). Inspection Report# : 2005004(pdf) Significance: May 17, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT A CONDITION ADVERSE TO QUALITY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to identify and correct a deficiency in the method of testing the auxiliary feedwater pump discharge check valves. Specifically, in 1998 the licensee identified the need to test the auxiliary feedwater pump Train B discharge check valve for leak tightness, but failed to implement the appropriate corrective actions to incorporate testing into Procedure 73ST-9XI38, "AF Pumps Discharge Check Valves - Inservice Test." This issue involved problem identification and resolution crosscutting aspects associated with the failure to implement timely corrective actions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2800972. The finding is greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function Inspection Report# : 2005003(pdf) Significance: SL-IV Mar 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A DESIGN CHANGE TO THE FACILITY A Severity Level IV non-cited violation of 10 CFR 50.59 requirements was identified for the failure to obtain a license amendment for a permanent modification to all six station emergency diesel generators. The inspectors determined that there were two modifications performed on the jacket water system of each emergency diesel generator. Condition Report/Disposition Request (CRDR) 130208, in 1993, directed the abandonment of the jacket water surge tank makeup valves on both emergency diesel generators of all three units. A recent modification, Design Modification Work Order 220055 in 2003, removed the surge tank low level alarm on both emergency diesel generators of all three units. The licensee replaced these two automatic actions (automatic makeup and low level alarm) with a manual operator action to fill, as necessary, every 12 hours during rounds. The inspectors reviewed the updated final safety analysis report (UFSAR) and design basis documents, and found that the automatic jacket water surge tank makeup, and the low level alarm, were both shown in UFSAR descriptions, drawings, and design value tables.

3Q/2005 Inspection Findings - Palo Verde 3 Page 2 of 6 The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the mitigating systems cornerstone attribute of equipment performance, and was repeated for all of the station emergency diesel generators. The issue was determined to result in more than a minimal increase in the consequences of a malfunction of an structure, system, or component important to safety evaluated in the UFSAR, since jacket water leakage could go undetected for up to 12 hours and affect diesel operability. Thus, a license amendment was required. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The lead inspector and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the mitigating system safety function. The licensee entered this issue into its corrective action program as CRDR 2711244. Inspection Report# : 2005002(pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Feb 25, 2005 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for failing to follow a maintenance procedure and associated engineering specification governing scaffold erection near safety-related components. Specifically, the licensee built approximately 85 scaffolds within the 2-inch clearance requirement and did not obtain engineering approval for the scaffolding installed in close proximity to safety-related equipment, as specified in Engineering Design Change 2000-00463. This issue involved human performance crosscutting aspects (personnel) associated with not following work instructions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2779469. The finding is determined to be greater than minor because if left uncorrected, the finding would become a more significant safety concern in that improperly installed scaffolding could impact the availability of mitigating equipment. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse affect to the mitigating equipment. Inspection Report# : 2005002(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW THE OPERABILITY DETERMINATION PROCESS FOR A DEGRADED CONDITION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for failing to follow documented procedures when performing activities affecting quality. Administrative Procedure 40DP-90P26, "Operability Determination," was not followed when performing an operability assessment of emergency diesel generator fuel oil transfer pump Train A following identification of water in the electrical conduit and junction boxes associated with the power supply to the pump. Specifically, licensee personnel failed to consider water intrusion into the electrical conduit for emergency diesel generator fuel oil transfer pump Train A as a condition that could affect the ability of the emergency diesel generator to perform its specified function, and consequently, declared emergency diesel generator Train A operable. The finding involved problem identification and resolution crosscutting aspects in that licensee

3Q/2005 Inspection Findings - Palo Verde 3 Page 3 of 6 personnel failed to recognize water intrusion into the conduit box as a potential deficiency that could impact emergency diesel generator operability until prompted by the inspectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2763326. The finding is greater than minor since it is associated with the equipment performance attribute of the mitigating system cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Using the Significance Determination Process Phase 1 Worksheet, this finding is determined to have very low safety significance because it only affects the mitigating system cornerstone and was a deficiency that did not result in the actual loss of the safety function of the emergency diesel generator. Inspection Report# : 2004005(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURE The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," involving the failure of engineering and operations personnel to implement requirements in the station's condition reporting and operability determination procedures following identification of a degraded condition. Specifically, engineering personnel did not promptly notify operations personnel of a condition that impacted the safety function of the high pressure safety injection and containment spray systems. In addition, operations personnel did not complete an immediate assessment of operability once they were informed of the degraded condition. This finding had crosscutting aspects associated with problem identification and resolution, since engineering personnel did not forward corrective action program documents regarding the degraded condition to the control room in a timely manner and operations personnel did not complete a prompt operability assessment. This finding also involved crosscutting aspects associated human performance, since engineering and operations personnel did not adequately communicate the status of the engineering department's efforts to review the degraded condition. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding has very low safety significance based on the results of a Significance Determination Process, Phase 3 analysis. Inspection Report# : 2004014(pdf) Significance: SL-III Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A CHANGE TO THE FACILITY INVOLVING MAINTAINING A SIGNIFICANT SEGMENT OF CONTAINMENT SUMP SAFETY INJECTION RECIRCULATION PIPING VOID OF WATER The team identified an apparent violation of 10 CFR 50.59 requirements for the licensee's failure to perform a written safety evaluation and receive NRC approval prior to implementing changes to the facility in 1992 which involved draining, and maintaining drained, a significant segment of containment sump safety injection recirculation piping during normal plant operations. This change resulted in the failure to maintain the safety injection piping full of water in accordance with the Updated Final Safety Analysis Report. This represented an unreviewed safety question since it increased the probability of a malfunction of equipment important to safety previously evaluated in the safety analysis report. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the team determined that traditional

3Q/2005 Inspection Findings - Palo Verde 3 Page 4 of 6 enforcement applied because this finding may have impacted the NRC's ability to perform its regulatory function. This is an apparent violation pending the results of a predecisional enforcement conference. Inspection Report# : 2004014(pdf) Significance: Oct 05, 2004 Identified By: NRC Item Type: NCV NonCited Violation EXCESSIVE RCS DRAIN RATES USED TO ESTABLISH MIDLOOP CONDITIONS A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for an inadequate procedure which resulted in a reactor coolant system level deviation during the reactor coolant system draindown to hot midloop conditions. Specifically, Procedure 40OP-9ZZ16, "RCS Drain Operations," Revision 45, was inadequate in that it did not provide reduced drain rates or increased hold points to minimize the excessive difference between actual and indicated reactor coolant system level caused by static head difference between the pressurizer/surge line and the reactor. The finding involved problem identification and resolution crosscutting aspects that contributed to the finding in that engineering documents were available that specified correct drain rates, but these drain rates were not referenced until NRC inspectors questioned the justification of the procedurally allowed values. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2742525. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events. The inadequate procedure resulted in an actual indicated level transient while the reactor coolant system was being drained in reduced inventory conditions. Using Manual Chapter 0609, Appendix G, "Shutdown Operations Significance Determination Process," this finding is determined to have very low safety significance because the event did not constitute a loss of control and did not represent a finding requiring quantitative assessment. The finding did not increase the likelihood of loss or cause a degradation in the ability to restore decay heat removal, reactor coolant system inventory, offsite power, alternate core cooling, or containment. Inspection Report# : 2004005(pdf) Barrier Integrity Significance: Nov 09, 2004 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO INCLUDE VENTS AND DRAINS INTO LOCKED VALVE PROGRAM A noncited violation of Technical Specification Surveillance Requirement 3.6.3.3 was identified for failure to perform the required position verification for vent and drain valves associated with eight safety injection system penetrations per unit. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2753335. This finding is greater than minor since it is associated with the configuration control attribute of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the containment physical design barrier is preserved to protect the public from radio nuclide releases caused by accidents or events. Using the Phase 1 Worksheet in Manual Chapter 0609, "Significance Determination Process," the finding is determined to have very low safety significance because it only affected the barrier integrity cornerstone, all the valves were found closed, and did not result in an actual open pathway out of the reactor containment. Inspection Report# : 2004005(pdf) Emergency Preparedness Significance: SL-III Mar 20, 2005 Identified By: NRC Item Type: AV Apparent Violation CHANGE TO RADIOLOGICAL EMERGENCY ACTION LEVELS WHICH DECREASED THE EFFECTIVENESS OF THE EMERGENCY PLAN The inspector identified an apparent violation of 10 CFR 50.54(q) for implementing a change to emergency action levels, which decreased the effectiveness of the emergency plan. Emergency Plan Implementing Procedure 99, "EPIP Standard Appendices," Revision 2, removed from two emergency action levels site boundary exposure rate as measured in the environment as a classifiable condition. Implementation of changes to emergency action levels, which decreased the effectiveness of the emergency plan was a performance deficiency. The finding is more than minor because removal of a classifiable condition from licensee emergency action levels has the potential to impact safety, and licensee implementation of a change to their emergency plan, which decreases the effectiveness of the plan without prior NRC approval, impacts the regulatory process. This finding is an apparent violation of 10 CFR 50.54(q). The licensee has entered this issue into their

3Q/2005 Inspection Findings - Palo Verde 3 Page 5 of 6 corrective action system as Condition Report/Disposition Request 2774185. Inspection Report# : 2005011(pdf) Significance: Mar 18, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT THE DEVELOPMENT OF PROTECTIVE ACTION RECOMENDATIONS NOT IN ACCORDANCE WITH FEDERAL GUIDANCE The inspectors identified a noncited violation of 10 CFR 50.54(q). The licensee failed to correct a practice which could result in an evacuation protective action recommendation for segments of the population that would not benefit from evacuation, contrary to federal guidance. This finding is more than minor because it was associated with a cornerstone attribute and affected the emergency preparedness cornerstone objective to ensure the adequate protection of the public health and safety. This finding is of very low safety significance because this practice could result in an increased dose to the evacuating public by evacuating some areas unnecessarily, but would not prevent the notification of appropriate protective action recommendations to those members of the public who did require evacuation. Inspection Report# : 2005002(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN CORRECTIVE LENSES READILY AVAILABLE The team identified a noncited violation of Technical Specification 5.4.1 because a reactor operator failed to have self-contained breathing apparatus corrective lens inserts readily available while on duty. The corrective lenses were located in a locker outside of the control room envelope. The operator had not been trained on the requirement. The finding is greater than minor because it was associated with an Emergency Preparedness cornerstone attribute (emergency response organization readiness) and it affected the associated cornerstone objective because the failure to have corrective lenses could have impaired the operator's ability to see the control boards and take proper actions. Using the Emergency Preparedness Significance Determination Process, the team determined the finding to be of very low safety significance because: (1) it was a failure to comply with a technical specification-required procedure, but (2) it did not affect a risk-significant planning standard. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Dec 15, 2004 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE PROCEDURES FOR IMPLEMENTATION OF AN EMERGENCY ACTION LEVEL The examiners identified a noncited violation of 10 CFR Part 50, Appendix E, IV.B, for inadequate procedures for implementation of an emergency action level. Emergency Action Level 3-13 requires that an Alert be declared if "major damage to irradiated fuel" is accompanied by a "valid high radiation alarm on the associated radiation monitor." However, the phrase "major damage to irradiated fuel" is not defined in any site procedure, nor is it defined, clarified, or addressed through operator training such that operators would know when conditions meet the threshold for declaring an Alert as a result of damage to irradiated fuel. This deficiency was evidenced during the examination by the fact that the examination authors, examination reviewers, and five of the seven license applicants taking the examination did not recognize conditions that warranted declaring an Alert using Emergency Action Level 3-13. The licensee was evaluating a clarifying change to Emergency Action Level 3-13 and its bases documents and has documented this issue in Condition Report/Disposition Request 2761670. The finding is a performance deficiency in that the licensee failed to identify that Emergency Action Level 3-13 would not be properly implemented without objectively defining the phrase "major damage to irradiated fuel" in either plant procedures or operator training. The finding is more than minor because it affects the Emergency Preparedness Cornerstone of procedural quality in that it could result in a failure to declare an Alert emergency classification when conditions warrant. The finding is of very low safety significance since it was a failure to comply with a regulatory requirement associated with a Risk-Significant Planning Standard that did not result in the loss or degradation of that Risk-Significant Planning Standard function. Inspection Report# : 2004301(pdf) Occupational Radiation Safety

3Q/2005 Inspection Findings - Palo Verde 3 Page 6 of 6 Public Radiation Safety Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SHIP RADIOACTIVE MATERIAL CORRECTLY The team reviewed a self-revealing, non-cited violation of 10 CFR 71.5, which occurred when the licensee failed to ship radioactive material correctly. A radioactive shipment classified as an "excepted package-limited quantity" exceeded the external dose rate limitation of 0.5 millirem per hour because licensee personnel failed to ensure that the package contents could not shift during transportation. The package recipient identified dose rates of 0.8 millirems per hour on the exterior surface of the package and notified the licensee of the problem. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to correctly ship radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. However, this finding cannot be evaluated by the Public Radiation Safety Significance Determination Process because it does not involve radioactive shipments classified as Schedule 5 through 11, as described in NUREG-1660, and it does not fit traditional enforcement. Therefore, the finding was reviewed by NRC management and determined to be of very low safety significance. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the licensee's shipper failed to ensure that the package contents could not shift. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CONTROL RADIOACTIVE MATERIAL The team reviewed a self-revealing, non-cited violation of Technical Specification 5.4.1, which occurred when the licensee failed to prevent radioactive material from leaving the radiological controlled area and the protected area. A tape measure worn on the lanyard of a radiation protection technician was not evaluated for the presence of radioactive material before its release from the radiological controlled area. The licensee discovered the radioactive material when the individual was whole body counted; however, the discovery was fortuitous because the licensee's procedural guidance did not specify that items, such as the lanyard, be worn consistently during the whole body counting process. The quantity of radioactive material on the tape measure would have been identified by the licensee's cabinet radiation detectors had the radiation protection technician used one as required. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to control radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the radiation protection technician failed to use the established process to evaluate the tool for radioactive contamination. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : November 30, 2005

4Q/2005 Inspection Findings - Palo Verde 3 Page 1 of 8 Palo Verde 3 4Q/2005 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE CONDITION WITH THE REFUELING WATER TANK INSTRUMENT PIT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the refueling water tank instrument pit. Specifically, in August 2003, the licensee inadvertently cancelled the work orders to correct deficiencies associated with flooding of the refueling water tank instrument pit. This error was identified by the licensee in October 2004; however, corrective actions were inadequate to ensure timely correction of the adverse condition. Additionally, two of the three work orders were inappropriately closed with no work performed following the inspectors' identification of the issue in August 2005. After identification by the inspectors, the licensee installed temporary modifications to prevent water intrusion into the pit. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2838845. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding required a Phase 3 analysis by a senior reactor analyst, since the finding was potentially risk significant due to external initiating event core damage sequences. A senior reactor analyst performed a qualitative assessment and concluded that the finding had very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that corrective actions lacked timeliness, adequacy, and thoroughness. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO DEMONSTRATE EFFECTIVE MAINTENANCE OF HOT LEG RESISTANCE TEMPERATURE DETECTORS The inspectors identified a noncited violation of 10 CFR 50.65(a)(2) for the failure to demonstrate that the performance or condition of three reactor coolant system resistance temperature detectors had been effectively controlled and monitored against licensee-established goals. Specifically, the licensee failed to identify, and properly account for, three detector functional failures occurring from May 31, 2004 to June 23, 2005. Consequently, the licensee did not establish appropriate goal setting and monitoring for the detectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2856282. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the licensee failed to identify the need to perform a maintenance rule functional failure review for failed resistance temperature detectors. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT AN IDENTIFIED ADVERSE CONDITION ASSOCIATED WITH MAINTENANCE DEPARTMENT GUIDELINES The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a

4Q/2005 Inspection Findings - Palo Verde 3 Page 2 of 8 condition adverse to quality involving the use of Maintenance Department Guidelines. Specifically, instrumentation and controls personnel did not complete actions used as a basis for closure for Condition Report/Disposition Request 2715129. In addition, the extent of condition review did not identify the continued active use of Maintenance Department Guidelines to perform quality related activities. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2830633. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the loss of safety function of any component, train, or system. The cause of the finding is related to the crosscutting element of problem identification and resolution in that maintenance personnel did not implement timely corrective actions and performed a poor extent of condition review. Inspection Report# : 2005005(pdf) Significance: SL-IV Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT LER TO REPORT SHUTDOWN REQUIRED BY TECHNICAL SPECIFICATIONS The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.73 for the failure to submit a licensee event report within 60 days to report the completion of a plant shutdown required by the Technical Specifications. A second similar example of a violation of the same regulation was identified by the licensee. Specifically, the licensee was required to submit a licensee event report by May 17, 2005, to report the completion of a plant shutdown required by the Technical Specifications that occurred on March 18, 2005. This licensee event report was submitted on November 7, 2005. Additionally, the licensee was required to submit a licensee event report by April 10, 2005, to report the completion of a plant shutdown that occurred on February 9, 2005. A revised licensee event report was submitted on January 6, 2006. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2829976 and 2844019. The finding was determined to be applicable to traditional enforcement because the NRC's ability to perform this regulatory function was potentially impacted by the licensee's failure to report the event. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the transportability review, conducted by regulatory affairs personnel, failed to identify an additional example of a missed reportable event that was subsequently identified by the NRC. Inspection Report# : 2005005(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR EMERGENCY CORE COOLING SYSTEM SUMP AND REFUELING WATER TANK SWAPOVER The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," related to potential air entrainment into the emergency core cooling system suction header from the refueling water tank. Specifically, the inspectors determined that the water level in the refueling water tank could fall below the level of the tank discharge pipe and associated vortex breaker during the transfer from the refueling water tank to the containment sump during design basis accidents. As a result, air could be drawn into the emergency core cooling system piping under accident conditions. This issue was applicable to both trains of all three units. Contrary to proper design control, engineering personnel failed to effectively implement design requirements to prevent potential air entrainment into the emergency core cooling system. The inspectors considered this finding to be more than minor, in accordance with NRC Manual Chapter 0612, "Power Reactor Inspection Reports," since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of design and configuration control. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2835132), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter-and intra-group coordination. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR REFUELING WATER TANK LEVEL INSTRUMENT CALIBRATION The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," for failure to translate design basis

4Q/2005 Inspection Findings - Palo Verde 3 Page 3 of 8 information into the calibration of refueling water tank level instruments. Without this information, operators were unaware that a Technical Specification listed minimum level in this tank may not provide sufficient usable volume of water for emergency core cooling system operation. Specifically, engineers failed to density compensate these instruments for allowable ranges of both temperature and boric acid concentration of the tank. Contrary to proper design control, the licensee failed to effectively implement design requirements to ensure operability of the refueling water tank. This issue was determined to affect the Mitigating Systems cornerstone and was more than minor based upon review of Example 3.j of Manual Chapter 0612, Appendix E. The errors were considered more than a minor calculation error because the deficiencies required re-performance of the calculations, significantly reduced the overall margin, and could be applicable to other such instrumentation calculations. However, engineering personnel demonstrated that while there was a loss of margin, there was no actual loss of function because of the inaccuracies in the RWT level instrument calibrations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2840920), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT STATION PROCEDURE FOR EQUIPMENT OPERABILITY (TECHNICAL SPECIFICATION 5.4.1.a) The inspectors identified three examples of a (Green) noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings." Specifically, these examples involved the licensee's failure to follow a procedure and to provide appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished, consistent with the facility's administrative procedure for the operability determination process. In the first case an engineer evaluated a concern in a condition report/disposition request without notifying the control room so an operability assessment could be performed. In the other cases, there was inadequate guidance given to operators to address when an operability assessment would be required. The inspectors considered this finding to be more than minor, in accordance with Manual Chapter 0612, since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of procedure quality and human performance. However, subsequent evaluations completed by the licensee verified that actual safety functions were not lost in any of these examples. The inspectors performed a Phase 1 significance determination, using NRC Manual Chapter 0609, and determined this issue screens out as having very low safety significance (Green) because a safety function was not lost. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626, this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination. The inspectors identified an additional example of the Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," described in NRC Supplemental Inspection Report 05000528; 05000529; 05000530/2005012, for the failure to establish an adequate procedure and implement existing procedures involving implementation of the operability determination process. The inspectors also identified examples where information provided to operations from engineering was not sufficiently accurate or complete to support operational decision making with respect to capacitor service life and the overall impact of the identified degraded or non-conforming capacitors. On November 1, 2005, the licensee inappropriately determined that the operability determination process was not applicable for a degraded capacitor condition that had the potential to impact Class 1E inverter operability. Consequently, the degraded condition was evaluated outside the operability determination process. Because the finding is of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626. The cause of the finding is related to the crosscutting element of human performance in that communications between the engineering and operations organizations was inadequate. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 SEVERITY LEVEL III VIOLATION FOR 50.59 ISSUE The U.S. Nuclear Regulatory Commission (NRC) performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with an inappropriate change to an emergency core cooling system procedure without prior NRC approval. This procedure change rendered portions of the system inoperable because of voiding. This performance issue was previously characterized as a Severity Level III violation of 10 CFR 50.59 and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. During this supplemental inspection, performed in accordance with Inspection Procedure 95002, the inspectors determined that the licensee's evaluation identified the primary root causes of the performance issue to be: (1) The site procedure revision process (01AC-0AP02) was inadequate, in that, the procedure allowed pre-screening' of changes that could potentially bypass performing a 10 CFR 50.59 screening for changes to the facility as described in the licensing basis; and (2) The corrective action program implementation was ineffective. The licensee also identified overlap and interface problems between the corrective action program, the engineering evaluation request program, and the instruction change

4Q/2005 Inspection Findings - Palo Verde 3 Page 4 of 8 request program. These issues, in conjunction with inadequate training to recognize a corrective action condition, contributed to the failure of station personnel to initiate a corrective action program input document in 1992 for the potential pipe voiding concern. The inspectors concluded that the licensee's evaluation and implemented corrective actions were appropriate to reasonably prevent repetition of the 10 CFR 50.59 violation. Given the licensee's acceptable performance in addressing the inappropriate procedure change and 10 CFR 50.59 program deficiencies, the Severity Level III violation is closed. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 (YELLOW) 10CFR50, APP B, CRITERION III VIOLATION The NRC performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with potential air entrainment into the emergency core cooling system. The licensee failed to incorporate original design requirements into the plant to maintain piping between the containment sump isolation valves filled with water. This performance issue was previously characterized as a 10 CFR 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. The inspectors determined that the licensee's evaluation identified a direct cause, nine root causes, and nine contributing causes of the performance issue. The evaluation was also used to develop an extensive list of corrective actions. The inspectors found the licensee's methods of evaluation to be appropriate. The NRC concluded that, while the licensee performed an adequate root cause evaluation of the Design Control violation, certain corrective actions were incomplete at the time of this inspection. Specifically, the team determined that for each of the root and contributing causes, not all corrective actions were sufficiently developed to ensure that the identified performance deficiencies were adequately addressed. In addition, some of the corrective actions were narrowly focused, or the implementation of those actions was not fully effective. Also, the team concluded that criteria and reviews were not established, for auditing or followup, to ensure that corrective actions were effective in improving performance in the affected areas. Consequently, the team did not have assurance that the planned corrective actions were sufficient to address the causes for the performance deficiencies associated with the violation. Therefore, the (Yellow) violation (VIO 2004/014-01) will remain open for further NRC review. Inspection Report# : 2005012(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM LICENSING DOCUMENT CHANGE REQUET AND 10 CFR 50.59 SCREENING FOR ABANDONMENT OF THE BORONOMETER The inspectors identified a noncited violation of 10 CFR Part50, AppendixB, CriterionXVI, "Corrective Action," for the failure to correct a discrepancy between the current condition of the boronometer and the required configuration described in the Updated Final Safety Analysis Report. Specifically, in April 2003 the licensee identified the need to perform a Licensing Document Change Request and a corresponding 10 CFR 50.59 screening due to the abandonment of the Updated Final Safety Analysis Report required boronometer, but failed to implement corrective actions to ensure that the Licensing Document Change Request and 10CFR 50.59 screening were performed. This issue involved problem identification and resolution crosscutting aspects associated with engineering personnel implementing timely corrective actions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2823704. The finding is greater than minor because it was associated with the design control performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter0609, "Significance Determination Process," Phase1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function (Section 4OA2). Inspection Report# : 2005004(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER CONTROL OF DESIGN PARAMETERS FOR THE EX-CORE SAFETY CHANNELS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for the ex-core nuclear instrument safety channels in that engineering personnel did not correctly translate design requirements, nor did they properly control design basis information regarding ex-core safety channels. Additionally, Technical Specification required values were maintained apart from design calculations and documents. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2612092. This finding is greater than minor because if left uncorrected it could become a more significant safety concern in that failures to maintain design calculations could result in the incorrect setting of safety related devices. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very

4Q/2005 Inspection Findings - Palo Verde 3 Page 5 of 8 low safety significance because there was not an actual loss of safety function. Inspection Report# : 2005004(pdf) Significance: SL-IV Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation INCOMPLETE AND INACCURATE INFORMATION ASSOCIATED WITH THE EX-CORE SAFETY CHANNELS. The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.9 for providing incomplete or inaccurate information to the NRC. Specifically, the licensee provided incomplete and inaccurate information regarding the design control of ex-core safety channel log power instrument setpoints. This information was determined to be material in that it affected the NRC's ability to determine compliance with NRC requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2829051. This finding was not assessed via NRC Manual Chapter 0609, "Significance Determination Process," because the licensee's actions impeded the regulatory process. Therefore, this finding is associated with the mitigating systems cornerstone. The inspectors determined that engineering personnel had additional information, including the subsequently corrected revision of the calculation going through final verification, and additional explanatory setpoint procedures, which were not referenced or provided during the original correspondence by the licensee. Had the complete and accurate information been supplied at the time of the original request in 2003, the NRC would have identified a design control violation at that time. The safety consequence of this issue is of very low safety significance, in that there was no actual loss of a safety function. Inspection Report# : 2005004(pdf) Significance: May 17, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT A CONDITION ADVERSE TO QUALITY The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to identify and correct a deficiency in the method of testing the auxiliary feedwater pump discharge check valves. Specifically, in 1998 the licensee identified the need to test the auxiliary feedwater pump Train B discharge check valve for leak tightness, but failed to implement the appropriate corrective actions to incorporate testing into Procedure 73ST-9XI38, "AF Pumps Discharge Check Valves - Inservice Test." This issue involved problem identification and resolution crosscutting aspects associated with the failure to implement timely corrective actions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2800972. The finding is greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function Inspection Report# : 2005003(pdf) Significance: SL-IV Mar 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO OBTAIN PRIOR NRC APPROVAL FOR A DESIGN CHANGE TO THE FACILITY A Severity Level IV non-cited violation of 10 CFR 50.59 requirements was identified for the failure to obtain a license amendment for a permanent modification to all six station emergency diesel generators. The inspectors determined that there were two modifications performed on the jacket water system of each emergency diesel generator. Condition Report/Disposition Request (CRDR) 130208, in 1993, directed the abandonment of the jacket water surge tank makeup valves on both emergency diesel generators of all three units. A recent modification, Design Modification Work Order 220055 in 2003, removed the surge tank low level alarm on both emergency diesel generators of all three units. The licensee replaced these two automatic actions (automatic makeup and low level alarm) with a manual operator action to fill, as necessary, every 12 hours during rounds. The inspectors reviewed the updated final safety analysis report (UFSAR) and design basis documents, and found that the automatic jacket water surge tank makeup, and the low level alarm, were both shown in UFSAR descriptions, drawings, and design value tables. The issue was determined to be more than minor, through Inspection Manual Chapter 0612, Appendix B, in that it affected the mitigating systems cornerstone attribute of equipment performance, and was repeated for all of the station emergency diesel generators. The issue was determined to result in more than a minimal increase in the consequences of a malfunction of an structure, system, or component important to safety evaluated in the UFSAR, since jacket water leakage could go undetected for up to 12 hours and affect diesel operability. Thus, a license amendment was required. In accordance with the NRC Enforcement Manual, violations of 10 CFR 50.59 are not processed through the significance determination process. Therefore, this issue was considered applicable to traditional enforcement. Although the significance determination process is not designed to assess significance of violations that potentially impact or impede the regulatory process, the result of a 10 CFR 50.59 violation can be assessed significance through the significance determination process. The lead inspector and the Region IV senior reactor analyst discussed the significance of this finding. An SDP Phase 1 screening was performed and the finding was determined to have very low safety significance because there was no actual loss of the mitigating system safety function. The licensee entered this issue into its corrective action program as CRDR 2711244. Inspection Report# : 2005002(pdf)

4Q/2005 Inspection Findings - Palo Verde 3 Page 6 of 8 Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Feb 25, 2005 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for failing to follow a maintenance procedure and associated engineering specification governing scaffold erection near safety-related components. Specifically, the licensee built approximately 85 scaffolds within the 2-inch clearance requirement and did not obtain engineering approval for the scaffolding installed in close proximity to safety-related equipment, as specified in Engineering Design Change 2000-00463. This issue involved human performance crosscutting aspects (personnel) associated with not following work instructions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2779469. The finding is determined to be greater than minor because if left uncorrected, the finding would become a more significant safety concern in that improperly installed scaffolding could impact the availability of mitigating equipment. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse affect to the mitigating equipment. Inspection Report# : 2005002(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {NOTE: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf) Barrier Integrity

4Q/2005 Inspection Findings - Palo Verde 3 Page 7 of 8 Emergency Preparedness Significance: SL-III Mar 20, 2005 Identified By: NRC Item Type: VIO Violation CHANGE TO RADIOLOGICAL EMERGENCY ACTION LEVELS WHICH DECREASED THE EFFECTIVENESS OF THE EMERGENCY PLAN The inspector identified an apparent violation of 10 CFR 50.54(q) for implementing a change to emergency action levels, which decreased the effectiveness of the emergency plan. Emergency Plan Implementing Procedure 99, "EPIP Standard Appendices," Revision 2, removed from two emergency action levels site boundary exposure rate as measured in the environment as a classifiable condition. Implementation of changes to emergency action levels, which decreased the effectiveness of the emergency plan was a performance deficiency. The finding is more than minor because removal of a classifiable condition from licensee emergency action levels has the potential to impact safety, and licensee implementation of a change to their emergency plan, which decreases the effectiveness of the plan without prior NRC approval, impacts the regulatory process. This finding is an apparent violation of 10 CFR 50.54(q). The licensee has entered this issue into their corrective action system as Condition Report/Disposition Request 2774185. The NRC informed Arizona Public Service Company of an apparent violation of emergency planning requirements by letter dated April 5, 2005. A predecisional Enforcement Conference was conducted with the licensee June 1, 2006. The licensee was subsequently informed of a Severity Level III Notice of Violation for a decrease in effectiveness of their emergency plan by a letter dated, June 27, 2005. An IP95001 supplemental inspection will be conducted during January 2006 to evaluate the licensee's root cause analysis and corrective actions. Inspection Report# : 2005011(pdf) Significance: Mar 18, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT THE DEVELOPMENT OF PROTECTIVE ACTION RECOMENDATIONS NOT IN ACCORDANCE WITH FEDERAL GUIDANCE The inspectors identified a noncited violation of 10 CFR 50.54(q). The licensee failed to correct a practice which could result in an evacuation protective action recommendation for segments of the population that would not benefit from evacuation, contrary to federal guidance. This finding is more than minor because it was associated with a cornerstone attribute and affected the emergency preparedness cornerstone objective to ensure the adequate protection of the public health and safety. This finding is of very low safety significance because this practice could result in an increased dose to the evacuating public by evacuating some areas unnecessarily, but would not prevent the notification of appropriate protective action recommendations to those members of the public who did require evacuation. Inspection Report# : 2005002(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN CORRECTIVE LENSES READILY AVAILABLE The team identified a noncited violation of Technical Specification 5.4.1 because a reactor operator failed to have self-contained breathing apparatus corrective lens inserts readily available while on duty. The corrective lenses were located in a locker outside of the control room envelope. The operator had not been trained on the requirement. The finding is greater than minor because it was associated with an Emergency Preparedness cornerstone attribute (emergency response organization readiness) and it affected the associated cornerstone objective because the failure to have corrective lenses could have impaired the operator's ability to see the control boards and take proper actions. Using the Emergency Preparedness Significance Determination Process, the team determined the finding to be of very low safety significance because: (1) it was a failure to comply with a technical specification-required procedure, but (2) it did not affect a risk-significant planning standard. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Occupational Radiation Safety

4Q/2005 Inspection Findings - Palo Verde 3 Page 8 of 8 Public Radiation Safety Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SHIP RADIOACTIVE MATERIAL CORRECTLY The team reviewed a self-revealing, non-cited violation of 10 CFR 71.5, which occurred when the licensee failed to ship radioactive material correctly. A radioactive shipment classified as an "excepted package-limited quantity" exceeded the external dose rate limitation of 0.5 millirem per hour because licensee personnel failed to ensure that the package contents could not shift during transportation. The package recipient identified dose rates of 0.8 millirems per hour on the exterior surface of the package and notified the licensee of the problem. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to correctly ship radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. However, this finding cannot be evaluated by the Public Radiation Safety Significance Determination Process because it does not involve radioactive shipments classified as Schedule 5 through 11, as described in NUREG-1660, and it does not fit traditional enforcement. Therefore, the finding was reviewed by NRC management and determined to be of very low safety significance. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the licensee's shipper failed to ensure that the package contents could not shift. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Significance: Feb 04, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CONTROL RADIOACTIVE MATERIAL The team reviewed a self-revealing, non-cited violation of Technical Specification 5.4.1, which occurred when the licensee failed to prevent radioactive material from leaving the radiological controlled area and the protected area. A tape measure worn on the lanyard of a radiation protection technician was not evaluated for the presence of radioactive material before its release from the radiological controlled area. The licensee discovered the radioactive material when the individual was whole body counted; however, the discovery was fortuitous because the licensee's procedural guidance did not specify that items, such as the lanyard, be worn consistently during the whole body counting process. The quantity of radioactive material on the tape measure would have been identified by the licensee's cabinet radiation detectors had the radiation protection technician used one as required. The finding is greater than minor because it was associated with a Public Radiation Safety cornerstone attribute (human performance) and it affected the associated cornerstone objective because the failure to control radioactive material decreases the licensee's assurance that the public will not receive unnecessary dose. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. Additionally, this finding had cross-cutting aspects associated with human performance (personnel). The individual directly contributed to the finding when the radiation protection technician failed to use the established process to evaluate the tool for radioactive contamination. The finding was placed into the licensee's corrective action program. Inspection Report# : 2005009(pdf) Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : March 03, 2006

1Q/2006 Inspection Findings - Palo Verde 3 Page 1 of 8 Palo Verde 3 1Q/2006 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Feb 03, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation UNTIMELY CORRECTIVE ACTIONS FOR FEEDWATER PUMP RESISTOR FAILURES A self-revealing, noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, was identified for failure to correct, and preclude repetition of, a significant condition adverse to quality involving the failure of the turbine driven auxiliary feedwater pump. Specifically, the licensee failed to perform a timely evaluation to determine the cause of the Units 2 and 3 turbine driven auxiliary feedwater pump governor power supply resistor failures. Approximately 7 months following the Unit 2 and 3 failures, the Unit 2 turbine driven auxiliary feedwater pump governor failed again due to the same resistor failure. The licensee entered the deficiency into their corrective action program for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability of systems that respond to initiating events. The failure of the Unit 2 turbine driven auxiliary feedwater pump governor power supply resistor affected the availability of the auxiliary feedwater system. Using the Phase 1 worksheet in Manual Chapter 0609, Significance Determination Process, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, delays in the evaluation of the resistors failures allowed a subsequent failure prior to completion of the corrective actions. (Section 4OA2e(2)(i) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE TREND OF CONTAMINATED OIL SAMPLES A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct an adverse trend of contaminated oil samples in a timely manner. Specifically, on April 1, 2005, the licensee identified an increasing trend of incorrect lubricant oil additions and contaminated oil samples and entered the deficiency in their corrective action program. As of January 2006, the inspectors concluded that the corrective actions taken as a result of the identified oil control deficiency were untimely, in that, 9 months later the frequency of new instances of oil control problems documented in the corrective action program remained unchanged. The licensee entered the deficiency into their corrective action program for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in the loss-of-safety function of a single train or system. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, poor work practices resulted in multiple oil contamination events and the corrective actions taken were ineffective in promptly correcting the condition. (Section 4OA2e(2)(ii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MEET MAINTENANCE TEST REQUIREMENTS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified for failure to perform required testing of the Unit 3 essential cooling water system Pump EWP01 breaker in accordance with requirements and acceptance limits. Pump EWP01 breaker test procedure established tolerances and acceptance criteria for the breaker sub-component clearances that were documented as not being met. The

1Q/2006 Inspection Findings - Palo Verde 3 Page 2 of 8 licensee entered the deficiency into their corrective action program for resolution. This finding was more than minor since it affected the equipment performance attribute of the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The failure to meet recommended tolerances and acceptance limits specified was similar to Manual Chapter 0612, Appendix E, more than minor example 2.c., in that, the issue was repetitive and affected multiple breakers tested. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because the condition was a qualification deficiency confirmed not to result in loss of function. The cause of the finding is related to the cross-cutting element of human performance in that maintenance personnel failed to properly implement maintenance procedures, and the deficient conditions were not identified by supervisory review of the completed procedures. (Section 4OA2e(2)(iii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY A MAINTENANCE RULE FUNCTIONAL FAILURE A noncited violation of 10 CFR 50.65(a)(2) was identified for failure to set goals and monitor the performance of the low pressure safety injection/shutdown cooling Pump 2A. Specifically, in May 2005, the licensee failed to accurately account for 15 hours of unavailability time for the low pressure safety injection/shutdown cooling Pump 2A, which when re-evaluated exceeded the performance trigger to enter (a)(1) monitoring. The licensee entered this deficiency into its corrective action program for resolution. The finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to maintain availability and reliability of structures systems and components needed to respond to initiating events and had a credible impact on safety. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the finding is determined to have very low safety significance because there was no design deficiency and the low pressure safety injection/shutdown cooling Pump 2A failure did not exceed the allowed technical specification outage time. The cause of the finding is related to the cross-cutting element of human performance in that the initial evaluation and subsequent supervisory reviews failed to identify the need for additional monitoring of the low pressure safety injection/shutdown cooling Pump 2A. (Section 4OA2e(2)(v)) Inspection Report# : 2006008(pdf) Significance: N/A Feb 03, 2006 Identified By: NRC Item Type: FIN Finding PERFORMANCE DECLINE IN PROBLEM IDENTIFICATION AND RESOLUTION The inspectors reviewed approximately 175 condition reports, 65 work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. Performance had declined significantly when compared to the previous problem identification and resolution assessment. Significant delays in evaluation of the significance of an identified problem, as well as identification of appropriate corrective actions, created a condition of large corrective action backlogs, repeat events, and continued non-compliances. The delays in completion of corrective actions continued to result in a significant number of self-disclosing and NRC identified violations and findings. Further, the licensee initiated actions to address the substantive cross-cutting issues in human performance and problem identification and resolution, however, the majority of the corrective actions are not completed and some of the initial completed actions were not fully effective. The corrective action program processes and procedures were generally adequate, but weaknesses in those processes were significantly challenged with an increased backlog of corrective actions. Also, competing priorities between resources and the backlog of corrective actions created a condition where many corrective actions were significantly delayed in their completion, contributing to failures to adequately implement the corrective action process. Based on interviews conducted, the inspectors concluded that a positive safety conscious work environment exists at the Palo Verde Nuclear Station. Employees felt free to raise safety concerns to their supervision, to the employee concerns program, and to the NRC. The interviewees indicated their assurance that potential safety significant problems would be identified and addressed, although challenges existed in timely completion of identified actions. The interviewees did not have the same level of assurance that less significant problems would be adequately addressed Inspection Report# : 2006008(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE CONDITION WITH THE REFUELING WATER TANK INSTRUMENT PIT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the refueling water tank instrument pit. Specifically, in August 2003, the licensee inadvertently cancelled the work orders to correct deficiencies associated with flooding of the refueling water tank instrument pit. This error was identified by the licensee in October 2004; however, corrective actions were inadequate to ensure timely correction of the adverse condition. Additionally, two of the three work orders were inappropriately closed with no work performed following the inspectors' identification of the issue in August

1Q/2006 Inspection Findings - Palo Verde 3 Page 3 of 8 2005. After identification by the inspectors, the licensee installed temporary modifications to prevent water intrusion into the pit. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2838845. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding required a Phase 3 analysis by a senior reactor analyst, since the finding was potentially risk significant due to external initiating event core damage sequences. A senior reactor analyst performed a qualitative assessment and concluded that the finding had very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that corrective actions lacked timeliness, adequacy, and thoroughness. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO DEMONSTRATE EFFECTIVE MAINTENANCE OF HOT LEG RESISTANCE TEMPERATURE DETECTORS The inspectors identified a noncited violation of 10 CFR 50.65(a)(2) for the failure to demonstrate that the performance or condition of three reactor coolant system resistance temperature detectors had been effectively controlled and monitored against licensee-established goals. Specifically, the licensee failed to identify, and properly account for, three detector functional failures occurring from May 31, 2004 to June 23, 2005. Consequently, the licensee did not establish appropriate goal setting and monitoring for the detectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2856282. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the licensee failed to identify the need to perform a maintenance rule functional failure review for failed resistance temperature detectors. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT AN IDENTIFIED ADVERSE CONDITION ASSOCIATED WITH MAINTENANCE DEPARTMENT GUIDELINES The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the use of Maintenance Department Guidelines. Specifically, instrumentation and controls personnel did not complete actions used as a basis for closure for Condition Report/Disposition Request 2715129. In addition, the extent of condition review did not identify the continued active use of Maintenance Department Guidelines to perform quality related activities. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2830633. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the loss of safety function of any component, train, or system. The cause of the finding is related to the crosscutting element of problem identification and resolution in that maintenance personnel did not implement timely corrective actions and performed a poor extent of condition review. Inspection Report# : 2005005(pdf) Significance: SL-IV Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT LER TO REPORT SHUTDOWN REQUIRED BY TECHNICAL SPECIFICATIONS The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.73 for the failure to submit a licensee event report within 60 days to report the completion of a plant shutdown required by the Technical Specifications. A second similar example of a violation of the same regulation was identified by the licensee. Specifically, the licensee was required to submit a licensee event report by May 17, 2005, to report the completion of a plant shutdown required by the Technical Specifications that occurred on March 18, 2005. This licensee event report was submitted on November 7, 2005. Additionally, the licensee was required to submit a licensee event report by April 10, 2005, to report the completion of a plant shutdown that occurred on February 9, 2005. A revised licensee event report was submitted on January 6, 2006. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2829976 and 2844019. The finding was determined to be applicable to traditional enforcement because the NRC's ability to perform this regulatory function was

1Q/2006 Inspection Findings - Palo Verde 3 Page 4 of 8 potentially impacted by the licensee's failure to report the event. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the transportability review, conducted by regulatory affairs personnel, failed to identify an additional example of a missed reportable event that was subsequently identified by the NRC. Inspection Report# : 2005005(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR EMERGENCY CORE COOLING SYSTEM SUMP AND REFUELING WATER TANK SWAPOVER The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," related to potential air entrainment into the emergency core cooling system suction header from the refueling water tank. Specifically, the inspectors determined that the water level in the refueling water tank could fall below the level of the tank discharge pipe and associated vortex breaker during the transfer from the refueling water tank to the containment sump during design basis accidents. As a result, air could be drawn into the emergency core cooling system piping under accident conditions. This issue was applicable to both trains of all three units. Contrary to proper design control, engineering personnel failed to effectively implement design requirements to prevent potential air entrainment into the emergency core cooling system. The inspectors considered this finding to be more than minor, in accordance with NRC Manual Chapter 0612, "Power Reactor Inspection Reports," since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of design and configuration control. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2835132), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter-and intra-group coordination. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR REFUELING WATER TANK LEVEL INSTRUMENT CALIBRATION The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," for failure to translate design basis information into the calibration of refueling water tank level instruments. Without this information, operators were unaware that a Technical Specification listed minimum level in this tank may not provide sufficient usable volume of water for emergency core cooling system operation. Specifically, engineers failed to density compensate these instruments for allowable ranges of both temperature and boric acid concentration of the tank. Contrary to proper design control, the licensee failed to effectively implement design requirements to ensure operability of the refueling water tank. This issue was determined to affect the Mitigating Systems cornerstone and was more than minor based upon review of Example 3.j of Manual Chapter 0612, Appendix E. The errors were considered more than a minor calculation error because the deficiencies required re-performance of the calculations, significantly reduced the overall margin, and could be applicable to other such instrumentation calculations. However, engineering personnel demonstrated that while there was a loss of margin, there was no actual loss of function because of the inaccuracies in the RWT level instrument calibrations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2840920), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT STATION PROCEDURE FOR EQUIPMENT OPERABILITY (TECHNICAL SPECIFICATION 5.4.1.a) The inspectors identified three examples of a (Green) noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings." Specifically, these examples involved the licensee's failure to follow a procedure and to provide appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished, consistent with the facility's

1Q/2006 Inspection Findings - Palo Verde 3 Page 5 of 8 administrative procedure for the operability determination process. In the first case an engineer evaluated a concern in a condition report/disposition request without notifying the control room so an operability assessment could be performed. In the other cases, there was inadequate guidance given to operators to address when an operability assessment would be required. The inspectors considered this finding to be more than minor, in accordance with Manual Chapter 0612, since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of procedure quality and human performance. However, subsequent evaluations completed by the licensee verified that actual safety functions were not lost in any of these examples. The inspectors performed a Phase 1 significance determination, using NRC Manual Chapter 0609, and determined this issue screens out as having very low safety significance (Green) because a safety function was not lost. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626, this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination. The inspectors identified an additional example of the Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," described in NRC Supplemental Inspection Report 05000528; 05000529; 05000530/2005012, for the failure to establish an adequate procedure and implement existing procedures involving implementation of the operability determination process. The inspectors also identified examples where information provided to operations from engineering was not sufficiently accurate or complete to support operational decision making with respect to capacitor service life and the overall impact of the identified degraded or non-conforming capacitors. On November 1, 2005, the licensee inappropriately determined that the operability determination process was not applicable for a degraded capacitor condition that had the potential to impact Class 1E inverter operability. Consequently, the degraded condition was evaluated outside the operability determination process. Because the finding is of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626. The cause of the finding is related to the crosscutting element of human performance in that communications between the engineering and operations organizations was inadequate. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 SEVERITY LEVEL III VIOLATION FOR 50.59 ISSUE The U.S. Nuclear Regulatory Commission (NRC) performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with an inappropriate change to an emergency core cooling system procedure without prior NRC approval. This procedure change rendered portions of the system inoperable because of voiding. This performance issue was previously characterized as a Severity Level III violation of 10 CFR 50.59 and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. During this supplemental inspection, performed in accordance with Inspection Procedure 95002, the inspectors determined that the licensee's evaluation identified the primary root causes of the performance issue to be: (1) The site procedure revision process (01AC-0AP02) was inadequate, in that, the procedure allowed pre-screening' of changes that could potentially bypass performing a 10 CFR 50.59 screening for changes to the facility as described in the licensing basis; and (2) The corrective action program implementation was ineffective. The licensee also identified overlap and interface problems between the corrective action program, the engineering evaluation request program, and the instruction change request program. These issues, in conjunction with inadequate training to recognize a corrective action condition, contributed to the failure of station personnel to initiate a corrective action program input document in 1992 for the potential pipe voiding concern. The inspectors concluded that the licensee's evaluation and implemented corrective actions were appropriate to reasonably prevent repetition of the 10 CFR 50.59 violation. Given the licensee's acceptable performance in addressing the inappropriate procedure change and 10 CFR 50.59 program deficiencies, the Severity Level III violation is closed. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 (YELLOW) 10CFR50, APP B, CRITERION III VIOLATION The NRC performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with potential air entrainment into the emergency core cooling system. The licensee failed to incorporate original design requirements into the plant to maintain piping between the containment sump isolation valves filled with water. This performance issue was previously characterized as a 10 CFR 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. The inspectors determined that the licensee's evaluation identified a direct cause, nine root causes, and nine contributing causes of the performance issue. The evaluation was also used to develop an extensive list of corrective actions. The inspectors found the licensee's methods of evaluation to be appropriate. The NRC concluded that, while the licensee performed an adequate root cause evaluation of the Design Control violation, certain corrective actions were incomplete at the time of this inspection. Specifically, the team determined that for each of the root and contributing causes, not all corrective actions were sufficiently developed to ensure that the identified performance deficiencies were adequately addressed. In addition, some of the corrective actions were narrowly focused, or the implementation of those actions was not fully effective. Also, the team concluded

1Q/2006 Inspection Findings - Palo Verde 3 Page 6 of 8 that criteria and reviews were not established, for auditing or followup, to ensure that corrective actions were effective in improving performance in the affected areas. Consequently, the team did not have assurance that the planned corrective actions were sufficient to address the causes for the performance deficiencies associated with the violation. Therefore, the (Yellow) violation (VIO 2004/014-01) will remain open for further NRC review. Inspection Report# : 2005012(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM LICENSING DOCUMENT CHANGE REQUET AND 10 CFR 50.59 SCREENING FOR ABANDONMENT OF THE BORONOMETER The inspectors identified a noncited violation of 10 CFR Part50, AppendixB, CriterionXVI, "Corrective Action," for the failure to correct a discrepancy between the current condition of the boronometer and the required configuration described in the Updated Final Safety Analysis Report. Specifically, in April 2003 the licensee identified the need to perform a Licensing Document Change Request and a corresponding 10 CFR 50.59 screening due to the abandonment of the Updated Final Safety Analysis Report required boronometer, but failed to implement corrective actions to ensure that the Licensing Document Change Request and 10CFR 50.59 screening were performed. This issue involved problem identification and resolution crosscutting aspects associated with engineering personnel implementing timely corrective actions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2823704. The finding is greater than minor because it was associated with the design control performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter0609, "Significance Determination Process," Phase1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function (Section 4OA2). Inspection Report# : 2005004(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER CONTROL OF DESIGN PARAMETERS FOR THE EX-CORE SAFETY CHANNELS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for the ex-core nuclear instrument safety channels in that engineering personnel did not correctly translate design requirements, nor did they properly control design basis information regarding ex-core safety channels. Additionally, Technical Specification required values were maintained apart from design calculations and documents. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2612092. This finding is greater than minor because if left uncorrected it could become a more significant safety concern in that failures to maintain design calculations could result in the incorrect setting of safety related devices. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was not an actual loss of safety function. Inspection Report# : 2005004(pdf) Significance: SL-IV Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation INCOMPLETE AND INACCURATE INFORMATION ASSOCIATED WITH THE EX-CORE SAFETY CHANNELS. The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.9 for providing incomplete or inaccurate information to the NRC. Specifically, the licensee provided incomplete and inaccurate information regarding the design control of ex-core safety channel log power instrument setpoints. This information was determined to be material in that it affected the NRC's ability to determine compliance with NRC requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2829051. This finding was not assessed via NRC Manual Chapter 0609, "Significance Determination Process," because the licensee's actions impeded the regulatory process. Therefore, this finding is associated with the mitigating systems cornerstone. The inspectors determined that engineering personnel had additional information, including the subsequently corrected revision of the calculation going through final verification, and additional explanatory setpoint procedures, which were not referenced or provided during the original correspondence by the licensee. Had the complete and accurate information been supplied at the time of the original request in 2003, the NRC would have identified a design control violation at that time. The safety consequence of this issue is of very low safety significance, in that there was no actual loss of a safety function. Inspection Report# : 2005004(pdf) Significance: May 17, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT A CONDITION ADVERSE TO QUALITY

1Q/2006 Inspection Findings - Palo Verde 3 Page 7 of 8 The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to identify and correct a deficiency in the method of testing the auxiliary feedwater pump discharge check valves. Specifically, in 1998 the licensee identified the need to test the auxiliary feedwater pump Train B discharge check valve for leak tightness, but failed to implement the appropriate corrective actions to incorporate testing into Procedure 73ST-9XI38, "AF Pumps Discharge Check Valves - Inservice Test." This issue involved problem identification and resolution crosscutting aspects associated with the failure to implement timely corrective actions. This issue was entered into the corrective action program as Condition Report/Disposition Request 2800972. The finding is greater than minor because it was associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function. Inspection Report# : 2005003(pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {NOTE: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf) Barrier Integrity Emergency Preparedness Significance: SL-III Mar 20, 2005

1Q/2006 Inspection Findings - Palo Verde 3 Page 8 of 8 Identified By: NRC Item Type: VIO Violation CHANGE TO RADIOLOGICAL EMERGENCY ACTION LEVELS WHICH DECREASED THE EFFECTIVENESS OF THE EMERGENCY PLAN The inspector identified an apparent violation of 10 CFR 50.54(q) for implementing a change to emergency action levels, which decreased the effectiveness of the emergency plan. Emergency Plan Implementing Procedure 99, "EPIP Standard Appendices," Revision 2, removed from two emergency action levels site boundary exposure rate as measured in the environment as a classifiable condition. Implementation of changes to emergency action levels, which decreased the effectiveness of the emergency plan was a performance deficiency. The finding is more than minor because removal of a classifiable condition from licensee emergency action levels has the potential to impact safety, and licensee implementation of a change to their emergency plan, which decreases the effectiveness of the plan without prior NRC approval, impacts the regulatory process. This finding is an apparent violation of 10 CFR 50.54(q). The licensee has entered this issue into their corrective action system as Condition Report/Disposition Request 2774185. The NRC informed Arizona Public Service Company of an apparent violation of emergency planning requirements by letter dated April 5, 2005. A predecisional Enforcement Conference was conducted with the licensee June 1, 2006. The licensee was subsequently informed of a Severity Level III Notice of Violation for a decrease in effectiveness of their emergency plan by a letter dated, June 27, 2005. An IP95001 supplemental inspection will be conducted during January 2006 to evaluate the licensee's root cause analysis and corrective actions. Inspection Report# : 2005011(pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : May 25, 2006

2Q/2006 Inspection Findings - Palo Verde 3 Page 1 of 10 Palo Verde 3 2Q/2006 Plant Inspection Findings Initiating Events Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation EMERGENCY DIESEL TRIP DURING TESTING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of maintenance personnel to follow procedures. Specifically, on April 2, 2006, maintenance personnel failed to follow Procedure 73ST-9DG02, "Class 1E Diesel Generator and Integrated Safeguards Test, Train B," by installing a jumper on the incorrect relay while testing the overcurrent trip. This resulted in an emergency diesel generator trip and de-energization of safety-related Bus PBB-S04. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2880952. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that maintenance personnel did not follow procedures due to self-imposed schedule pressures. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTING IN SPENT FUEL POOL DRAIN DOWN AND SPILL IN THE FUEL BUILDING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, between April 7 and April 12, 2006, operations personnel did not follow Procedure 40OP-9PC06, Fuel Pool Clean Up and Transfer, Revision 37, Appendix AU, resulting in Valve PCN-V119, Cleanup Header Return to the Fuel Canal, being improperly aligned. This resulted in an inadvertent transfer of approximately 1200 gallons of spent fuel pool water to the transfer canal and a spill of contaminated water onto the 120 foot and 100 foot elevations of the fuel building. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2884054. The finding is greater than minor because it is associated with the configuration control and human performance cornerstone attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by NRC management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures due to poor human error prevention techniques. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW GTG SURVEILLANCE PROCEDURE CAUSES LOSS OF POWER TO SAFETY-RELATED BUS A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedure. Specifically, on May 6, 2006, operations personnel failed to achieve a current of approximately zero amperes through Breaker NAN-S03A prior to opening the offsite supply breaker to Bus PBA-S03 as required by Procedure 40OP-9GT01, "Gas Turbine Generator Isochronous Test." This resulted in the loss of power to safety-related Bus PBA-S03 and an actuation of emergency diesel generator Train A. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2891404.

2Q/2006 Inspection Findings - Palo Verde 3 Page 2 of 10 The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that poor attention to detail by operations personnel resulted in the loss of power to a safety bus. Inspection Report# : 2006003(pdf) Mitigating Systems Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE DEGRADED CONDITIONS TO ENSURE OPERABILITY The inspectors identified two examples of a noncited violation of Technical Specification 5.4.1.a for the failure of engineering personnel to follow procedures. On April 17, 2006, engineering personnel failed to follow Procedure 81DP-0DC13, "Deficiency Work Order," resulting in shutdown cooling Train B being declared operable without fully addressing a potential degraded condition associated with the potential for missing parts from a submersible remaining in plant systems. On May 10, 2006, engineering personnel did not perform evaluations and dispositions required by Procedure 81DP-0DC13 to justify a degraded condition for continued use of a pipe support associated with shutdown cooling line Train A. These issues were entered into the licensee's corrective action program as Condition Report/Disposition Requests 2902258 and 2892737. The finding is greater than minor because it would become a more significant concern if left uncorrected in that Technical Specification required structures, systems, and components (SSCs) may not be operable as required for applicable plant conditions. The performance deficiency associated with this finding was representative of a broader concern related to how the licensee ensures the operability of SSCs required to comply with Technical Specifications. Specifically, the licensee's programs and processes for assessing degraded conditions have not been implemented with the rigor and thoroughness necessary to ensure compliance with regulatory requirements. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that engineering personnel did not follow procedures, resulting in the failure to perform required evaluations and dispositions for deficient conditions. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTED IN DECLARING BOTH TRAINS OF LOW PRESSURE SAFETY INJECTION INOPERABLE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow Procedure 73ST-9SI03, Leak Test of SI/RCS Pressure Isolation Valves, which resulted in declaring both trains of low pressure safety injection inoperable. Specifically, on May 10, 2006, operations personnel inappropriately allowed safety-injection header pressure to exceed 1850 pisg, which rendered the associated low pressure safety injection pumps inoperable. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 2892697. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures and apply the necessary rigor and questioning attitude to requirements and associated decisions because of self-imposed schedule pressures. Inspection Report# : 2006003(pdf) Significance: Mar 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DIESEL FIRE PUMP BATTERY SURVEILLANCE The inspectors identified a noncited violation of Technical Specification 5.4.1.d for an inadequate surveillance test for the diesel fire pump batteries. Specifically, since 1995, the method described in Procedure 38FT-9FP02, "Fire Protection System Monthly Diesel Fire Battery Test," Revision 4, to

2Q/2006 Inspection Findings - Palo Verde 3 Page 3 of 10 verify the specific gravity of the diesel fire pump batteries was inadequate in that the specific gravity was not directly measured, but was verified by a correlation to open circuit voltage. This methodology could result in a measured battery voltage that would be higher than the true specific gravity would provide. The cause was due to an inadequate engineering evaluation to develop the correlation used in the surveillance procedure. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2875906. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet and Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process," the finding is determined to have very low safety significance because the fire pump battery performance and reliability is minimally affected since the batteries were replaced every two years, and the required capacity of the batteries is approximately 60 percent of a newly installed battery. Inspection Report# : 2006002(pdf) Significance: Feb 03, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation UNTIMELY CORRECTIVE ACTIONS FOR FEEDWATER PUMP RESISTOR FAILURES A self-revealing, noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, was identified for failure to correct, and preclude repetition of, a significant condition adverse to quality involving the failure of the turbine driven auxiliary feedwater pump. Specifically, the licensee failed to perform a timely evaluation to determine the cause of the Units 2 and 3 turbine driven auxiliary feedwater pump governor power supply resistor failures. Approximately 7 months following the Unit 2 and 3 failures, the Unit 2 turbine driven auxiliary feedwater pump governor failed again due to the same resistor failure. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2871541 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability of systems that respond to initiating events. The failure of the Unit 2 turbine driven auxiliary feedwater pump governor power supply resistor affected the availability of the auxiliary feedwater system. Using the Phase 1 worksheet in Manual Chapter 0609, Significance Determination Process, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, delays in the evaluation of the resistors failures allowed a subsequent failure prior to completion of the corrective actions. (Section 4OA2e(2)(i) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE TREND OF CONTAMINATED OIL SAMPLES A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct an adverse trend of contaminated oil samples in a timely manner. Specifically, on April 1, 2005, the licensee identified an increasing trend of incorrect lubricant oil additions and contaminated oil samples and entered the deficiency in their corrective action program. As of January 2006, the inspectors concluded that the corrective actions taken as a result of the identified oil control deficiency were untimely, in that, 9 months later the frequency of new instances of oil control problems documented in the corrective action program remained unchanged. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2785915 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in the loss-of-safety function of a single train or system. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, poor work practices resulted in multiple oil contamination events and the corrective actions taken were ineffective in promptly correcting the condition. (Section 4OA2e(2)(ii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MEET MAINTENANCE TEST REQUIREMENTS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified for failure to perform required testing of the Unit 3 essential cooling water system Pump EWP01 breaker in accordance with requirements and acceptance limits. Pump EWP01 breaker test procedure established tolerances and acceptance criteria for the breaker sub-component clearances that were documented as not being met. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2865792 for resolution. This finding was more than minor since it affected the equipment performance attribute of the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The failure to meet

2Q/2006 Inspection Findings - Palo Verde 3 Page 4 of 10 recommended tolerances and acceptance limits specified was similar to Manual Chapter 0612, Appendix E, more than minor example 2.c., in that, the issue was repetitive and affected multiple breakers tested. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because the condition was a qualification deficiency confirmed not to result in loss of function. The cause of the finding is related to the cross-cutting element of human performance in that maintenance personnel failed to properly implement maintenance procedures, and the deficient conditions were not identified by supervisory review of the completed procedures. (Section 4OA2e(2)(iii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY A MAINTENANCE RULE FUNCTIONAL FAILURE A noncited violation of 10 CFR 50.65(a)(2) was identified for the failure to demonstrate that the performance or condition of the low pressure safety injection/shutdown cooling Pump 2A was adequate. Specifically, in May 2005, the licensee failed to accurately account for 15 hours of unavailability time for the low pressure safety injection/shutdown cooling Pump 2A, which when re-evaluated, exceeded the performance trigger to enter (a)(1) monitoring. The licensee entered this deficiency into their corrective action program as Condition Report Disposition Request 2865315 for resolution. The finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to maintain availability and reliability of structures systems and components needed to respond to initiating events and had a credible impact on safety. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the finding is determined to have very low safety significance because there was no design deficiency and the low pressure safety injection/shutdown cooling Pump 2A failure did not exceed the allowed technical specification outage time. The cause of the finding is related to the cross-cutting element of human performance in that the initial evaluation and subsequent supervisory reviews failed to identify the need for additional monitoring of the low pressure safety injection/shutdown cooling Pump 2A. (Section 4OA2e(2)(v)) Inspection Report# : 2006008(pdf) Significance: N/A Feb 03, 2006 Identified By: NRC Item Type: FIN Finding PERFORMANCE DECLINE IN PROBLEM IDENTIFICATION AND RESOLUTION The inspectors reviewed approximately 175 condition reports, 65 work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. Overall, performance declined when compared to the previous problem identification and resolution assessment. Significant delays in evaluation of the significance of an identified problem, as well as identification of appropriate corrective actions, resulted in large corrective action backlogs, some repeat events, and examples of continued noncompliance. The delays in completion of corrective actions continued to result in a significant number of self-disclosing and NRC-identified violations and findings. While the licensee initiated actions to address the substantive cross-cutting issues in human performance and problem identification and resolution, the majority of the corrective actions were not complete and some of the initial completed actions were not effective. Also, competing priorities between resources and the backlog of corrective actions created a condition where many corrective actions were significantly delayed in their completion, contributing to failures to adequately implement the corrective action process. The team concluded that while a safety-conscious work environment exists at your facility, isolated concerns were raised by your staff during the interviews. These concerns were associated with not having sufficient personnel to accomplish long-term improvements, a loss of trust that management would not subject the staff to negative consequences for raising issues, some confusion about when to place an adverse condition into your corrective action program, and a decrease in confidence that the corrective action program will adequately address problems. (Section 4OA2). Inspection Report# : 2006008(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE CONDITION WITH THE REFUELING WATER TANK INSTRUMENT PIT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the refueling water tank instrument pit. Specifically, in August 2003, the licensee inadvertently cancelled the work orders to correct deficiencies associated with flooding of the refueling water tank instrument pit. This error was identified by the licensee in October 2004; however, corrective actions were inadequate to ensure timely correction of the adverse condition. Additionally, two of the three work orders were inappropriately closed with no work performed following the inspectors' identification of the issue in August 2005. After identification by the inspectors, the licensee installed temporary modifications to prevent water intrusion into the pit. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2838845. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding required a Phase 3 analysis by a senior reactor analyst, since the finding was potentially risk significant due to external initiating event core damage sequences. A senior reactor analyst performed a qualitative assessment and concluded that the finding had very low safety significance. The cause of the finding is related to the

2Q/2006 Inspection Findings - Palo Verde 3 Page 5 of 10 crosscutting element of problem identification and resolution in that corrective actions lacked timeliness, adequacy, and thoroughness. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO DEMONSTRATE EFFECTIVE MAINTENANCE OF HOT LEG RESISTANCE TEMPERATURE DETECTORS The inspectors identified a noncited violation of 10 CFR 50.65(a)(2) for the failure to demonstrate that the performance or condition of three reactor coolant system resistance temperature detectors had been effectively controlled and monitored against licensee-established goals. Specifically, the licensee failed to identify, and properly account for, three detector functional failures occurring from May 31, 2004 to June 23, 2005. Consequently, the licensee did not establish appropriate goal setting and monitoring for the detectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2856282. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the licensee failed to identify the need to perform a maintenance rule functional failure review for failed resistance temperature detectors. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT AN IDENTIFIED ADVERSE CONDITION ASSOCIATED WITH MAINTENANCE DEPARTMENT GUIDELINES The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the use of Maintenance Department Guidelines. Specifically, instrumentation and controls personnel did not complete actions used as a basis for closure for Condition Report/Disposition Request 2715129. In addition, the extent of condition review did not identify the continued active use of Maintenance Department Guidelines to perform quality related activities. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2830633. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the loss of safety function of any component, train, or system. The cause of the finding is related to the crosscutting element of problem identification and resolution in that maintenance personnel did not implement timely corrective actions and performed a poor extent of condition review. Inspection Report# : 2005005(pdf) Significance: SL-IV Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT LER TO REPORT SHUTDOWN REQUIRED BY TECHNICAL SPECIFICATIONS The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.73 for the failure to submit a licensee event report within 60 days to report the completion of a plant shutdown required by the Technical Specifications. A second similar example of a violation of the same regulation was identified by the licensee. Specifically, the licensee was required to submit a licensee event report by May 17, 2005, to report the completion of a plant shutdown required by the Technical Specifications that occurred on March 18, 2005. This licensee event report was submitted on November 7, 2005. Additionally, the licensee was required to submit a licensee event report by April 10, 2005, to report the completion of a plant shutdown that occurred on February 9, 2005. A revised licensee event report was submitted on January 6, 2006. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2829976 and 2844019. The finding was determined to be applicable to traditional enforcement because the NRC's ability to perform this regulatory function was potentially impacted by the licensee's failure to report the event. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the transportability review, conducted by regulatory affairs personnel, failed to identify an additional example of a missed reportable event that was subsequently identified by the NRC. Inspection Report# : 2005005(pdf) Significance: Dec 16, 2005

2Q/2006 Inspection Findings - Palo Verde 3 Page 6 of 10 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR EMERGENCY CORE COOLING SYSTEM SUMP AND REFUELING WATER TANK SWAPOVER The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," related to potential air entrainment into the emergency core cooling system suction header from the refueling water tank. Specifically, the inspectors determined that the water level in the refueling water tank could fall below the level of the tank discharge pipe and associated vortex breaker during the transfer from the refueling water tank to the containment sump during design basis accidents. As a result, air could be drawn into the emergency core cooling system piping under accident conditions. This issue was applicable to both trains of all three units. Contrary to proper design control, engineering personnel failed to effectively implement design requirements to prevent potential air entrainment into the emergency core cooling system. The inspectors considered this finding to be more than minor, in accordance with NRC Manual Chapter 0612, "Power Reactor Inspection Reports," since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of design and configuration control. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2835132), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR REFUELING WATER TANK LEVEL INSTRUMENT CALIBRATION The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," for failure to translate design basis information into the calibration of refueling water tank level instruments. Without this information, operators were unaware that a Technical Specification listed minimum level in this tank may not provide sufficient usable volume of water for emergency core cooling system operation. Specifically, engineers failed to density compensate these instruments for allowable ranges of both temperature and boric acid concentration of the tank. Contrary to proper design control, the licensee failed to effectively implement design requirements to ensure operability of the refueling water tank. This issue was determined to affect the Mitigating Systems cornerstone and was more than minor based upon review of Example 3.j of Manual Chapter 0612, Appendix E. The errors were considered more than a minor calculation error because the deficiencies required re-performance of the calculations, significantly reduced the overall margin, and could be applicable to other such instrumentation calculations. However, engineering personnel demonstrated that while there was a loss of margin, there was no actual loss of function because of the inaccuracies in the RWT level instrument calibrations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2840920), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT STATION PROCEDURE FOR EQUIPMENT OPERABILITY (TECHNICAL SPECIFICATION 5.4.1.a) The inspectors identified three examples of a (Green) noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings." Specifically, these examples involved the licensee's failure to follow a procedure and to provide appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished, consistent with the facility's administrative procedure for the operability determination process. In the first case an engineer evaluated a concern in a condition report/disposition request without notifying the control room so an operability assessment could be performed. In the other cases, there was inadequate guidance given to operators to address when an operability assessment would be required. The inspectors considered this finding to be more than minor, in accordance with Manual Chapter 0612, since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of procedure quality and human performance. However, subsequent evaluations completed by the licensee verified that actual safety functions were not lost in any of these examples. The inspectors performed a Phase 1 significance determination, using NRC Manual Chapter 0609, and determined this issue screens out as having very low safety significance (Green) because a safety function was not lost. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626, this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination. The inspectors identified an additional example of the Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions,

2Q/2006 Inspection Findings - Palo Verde 3 Page 7 of 10 Procedures, and Drawings," described in NRC Supplemental Inspection Report 05000528; 05000529; 05000530/2005012, for the failure to establish an adequate procedure and implement existing procedures involving implementation of the operability determination process. The inspectors also identified examples where information provided to operations from engineering was not sufficiently accurate or complete to support operational decision making with respect to capacitor service life and the overall impact of the identified degraded or non-conforming capacitors. On November 1, 2005, the licensee inappropriately determined that the operability determination process was not applicable for a degraded capacitor condition that had the potential to impact Class 1E inverter operability. Consequently, the degraded condition was evaluated outside the operability determination process. Because the finding is of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626. The cause of the finding is related to the crosscutting element of human performance in that communications between the engineering and operations organizations was inadequate. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 SEVERITY LEVEL III VIOLATION FOR 50.59 ISSUE The U.S. Nuclear Regulatory Commission (NRC) performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with an inappropriate change to an emergency core cooling system procedure without prior NRC approval. This procedure change rendered portions of the system inoperable because of voiding. This performance issue was previously characterized as a Severity Level III violation of 10 CFR 50.59 and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. During this supplemental inspection, performed in accordance with Inspection Procedure 95002, the inspectors determined that the licensee's evaluation identified the primary root causes of the performance issue to be: (1) The site procedure revision process (01AC-0AP02) was inadequate, in that, the procedure allowed pre-screening' of changes that could potentially bypass performing a 10 CFR 50.59 screening for changes to the facility as described in the licensing basis; and (2) The corrective action program implementation was ineffective. The licensee also identified overlap and interface problems between the corrective action program, the engineering evaluation request program, and the instruction change request program. These issues, in conjunction with inadequate training to recognize a corrective action condition, contributed to the failure of station personnel to initiate a corrective action program input document in 1992 for the potential pipe voiding concern. The inspectors concluded that the licensee's evaluation and implemented corrective actions were appropriate to reasonably prevent repetition of the 10 CFR 50.59 violation. Given the licensee's acceptable performance in addressing the inappropriate procedure change and 10 CFR 50.59 program deficiencies, the Severity Level III violation is closed. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 (YELLOW) 10CFR50, APP B, CRITERION III VIOLATION The NRC performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with potential air entrainment into the emergency core cooling system. The licensee failed to incorporate original design requirements into the plant to maintain piping between the containment sump isolation valves filled with water. This performance issue was previously characterized as a 10 CFR 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. The inspectors determined that the licensee's evaluation identified a direct cause, nine root causes, and nine contributing causes of the performance issue. The evaluation was also used to develop an extensive list of corrective actions. The inspectors found the licensee's methods of evaluation to be appropriate. The NRC concluded that, while the licensee performed an adequate root cause evaluation of the Design Control violation, certain corrective actions were incomplete at the time of this inspection. Specifically, the team determined that for each of the root and contributing causes, not all corrective actions were sufficiently developed to ensure that the identified performance deficiencies were adequately addressed. In addition, some of the corrective actions were narrowly focused, or the implementation of those actions was not fully effective. Also, the team concluded that criteria and reviews were not established, for auditing or followup, to ensure that corrective actions were effective in improving performance in the affected areas. Consequently, the team did not have assurance that the planned corrective actions were sufficient to address the causes for the performance deficiencies associated with the violation. Therefore, the (Yellow) violation (VIO 2004/014-01) will remain open for further NRC review. Inspection Report# : 2005012(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PERFORM LICENSING DOCUMENT CHANGE REQUEST AND 10 CFR 50.59 SCREENING FOR ABANDONMENT OF THE BORONOMETER The inspectors identified a noncited violation of 10 CFR Part50, AppendixB, CriterionXVI, "Corrective Action," for the failure to correct a discrepancy between the current condition of the boronometer and the required configuration described in the Updated Final Safety Analysis Report. Specifically, in April 2003 the licensee identified the need to perform a Licensing Document Change Request and a corresponding 10 CFR 50.59 screening due to the abandonment of the Updated Final Safety Analysis Report required boronometer, but failed to implement corrective actions to ensure that the Licensing Document Change Request and 10CFR 50.59 screening were performed. This issue involved problem

2Q/2006 Inspection Findings - Palo Verde 3 Page 8 of 10 identification and resolution crosscutting aspects associated with engineering personnel implementing timely corrective actions. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2823704. The finding is greater than minor because it was associated with the design control performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter0609, "Significance Determination Process," Phase1 Worksheet, the finding is determined to have very low safety significance because there was no actual loss of safety function (Section 4OA2). Inspection Report# : 2005004(pdf) Significance: Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER CONTROL OF DESIGN PARAMETERS FOR THE EX-CORE SAFETY CHANNELS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for the ex-core nuclear instrument safety channels in that engineering personnel did not correctly translate design requirements, nor did they properly control design basis information regarding ex-core safety channels. Additionally, Technical Specification required values were maintained apart from design calculations and documents. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2612092. This finding is greater than minor because if left uncorrected it could become a more significant safety concern in that failures to maintain design calculations could result in the incorrect setting of safety related devices. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because there was not an actual loss of safety function. Inspection Report# : 2005004(pdf) Significance: SL-IV Sep 30, 2005 Identified By: NRC Item Type: NCV NonCited Violation INCOMPLETE AND INACCURATE INFORMATION ASSOCIATED WITH THE EX-CORE SAFETY CHANNELS. The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.9 for providing incomplete or inaccurate information to the NRC. Specifically, the licensee provided incomplete and inaccurate information regarding the design control of ex-core safety channel log power instrument setpoints. This information was determined to be material in that it affected the NRC's ability to determine compliance with NRC requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2829051. This finding was not assessed via NRC Manual Chapter 0609, "Significance Determination Process," because the licensee's actions impeded the regulatory process. Therefore, this finding is associated with the mitigating systems cornerstone. The inspectors determined that engineering personnel had additional information, including the subsequently corrected revision of the calculation going through final verification, and additional explanatory setpoint procedures, which were not referenced or provided during the original correspondence by the licensee. Had the complete and accurate information been supplied at the time of the original request in 2003, the NRC would have identified a design control violation at that time. The safety consequence of this issue is of very low safety significance, in that there was no actual loss of a safety function. Inspection Report# : 2005004(pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation

2Q/2006 Inspection Findings - Palo Verde 3 Page 9 of 10 FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {NOTE: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Significance: Mar 31, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW RADIATION EXPOSURE PERMIT INSTRUCTIONS The inspector reviewed a self-revealing, noncited violation of Technical Specification 5.4.1.a, resulting from two radiation workers failure to follow radiation exposure permit instructions. On November 22, 2005, two radiation workers, without notifying radiation protection staff, used a pneumatic grinder with a wire wheel inside of the Unit-1 Steam Generator No. 2 cold leg pipe. As a result of the wire wheel grinding, both workers were contaminated. Radiation protection staff members were not made aware of the contamination event until the workers alarmed the PM-7 portal monitor upon attempting egress from the 140-foot radiological controlled area. One worker received unplanned and unintended internal dose of 6 millirem. The other worker did not receive an internal dose. As corrective action, the licensee counseled the two workers and their supervision, and informed the contractors management. The finding was greater than minor because it was associated with one of the cornerstone attributes (exposure control) and the finding affected the occupational radiation safety cornerstone objective, in that a failure to follow radiation exposure permit instructions resulted in additional radiation dose. The inspector determined that the finding had no more than very low safety significance because: (1) it did not involve an ALARA finding, (2) there was no personnel overexposure, (3) there was no substantial potential for personnel overexposure, and (4) the finding did not compromise the licensees ability to assess dose. The finding also had crosscutting aspects related to human performance, in that, radiation workers failed to follow the radiation exposure permit instructions, which directly resulted in the finding. Inspection Report# : 2006002(pdf) Public Radiation Safety Physical Protection Physical Protection information not publicly available.

2Q/2006 Inspection Findings - Palo Verde 3 Page 10 of 10 Miscellaneous Last modified : August 25, 2006

3Q/2006 Inspection Findings - Palo Verde 3 Page 1 of 14 Palo Verde 3 3Q/2006 Plant Inspection Findings Initiating Events Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation EMERGENCY DIESEL TRIP DURING TESTING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of maintenance personnel to follow procedures. Specifically, on April 2, 2006, maintenance personnel failed to follow Procedure 73ST-9DG02, "Class 1E Diesel Generator and Integrated Safeguards Test, Train B," by installing a jumper on the incorrect relay while testing the overcurrent trip. This resulted in an emergency diesel generator trip and de-energization of safety-related Bus PBB-S04. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2880952. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that maintenance personnel did not follow procedures due to self-imposed schedule pressures. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTING IN SPENT FUEL POOL DRAIN DOWN AND SPILL IN THE FUEL BUILDING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, between April 7 and April 12, 2006, operations personnel did not follow Procedure 40OP-9PC06, Fuel Pool Clean Up and Transfer, Revision 37, Appendix AU, resulting in Valve PCN-V119, Cleanup Header Return to the Fuel Canal, being improperly aligned. This resulted in an inadvertent transfer of approximately 1200 gallons of spent fuel pool water to the transfer canal and a spill of contaminated water onto the 120 foot and 100 foot elevations of the fuel building. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2884054. The finding is greater than minor because it is associated with the configuration control and human performance cornerstone attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by NRC management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. The cause of the finding is related to the crosscutting

3Q/2006 Inspection Findings - Palo Verde 3 Page 2 of 14 element of human performance in that operations personnel did not follow procedures due to poor human error prevention techniques. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW GTG SURVEILLANCE PROCEDURE CAUSES LOSS OF POWER TO SAFETY-RELATED BUS A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedure. Specifically, on May 6, 2006, operations personnel failed to achieve a current of approximately zero amperes through Breaker NAN-S03A prior to opening the offsite supply breaker to Bus PBA-S03 as required by Procedure 40OP-9GT01, "Gas Turbine Generator Isochronous Test." This resulted in the loss of power to safety-related Bus PBA-S03 and an actuation of emergency diesel generator Train A. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2891404. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that poor attention to detail by operations personnel resulted in the loss of power to a safety bus. Inspection Report# : 2006003(pdf) Mitigating Systems Significance: TBD Sep 26, 2006 Identified By: NRC Item Type: AV Apparent Violation INADEQUATE TEST CONTROL TO PROMPTLY IDENTIFY UNACCEPTABLE PERFORMANCE TEST RESULTS A finding with five apparent violations was identified associated with fouling of safety-related heat exchangers cooled by the emergency spray pond system. Between 1995 and May, 2006, the licensee failed to recognize that improperly implemented chemistry controls for the emergency spray pond system caused a significant condition adverse to quality which degraded the performance of all emergency diesel generators and emergency cooling water systems. The degraded performance was primarily due to heat exchanger fouling caused by adding excessive amounts of chemicals. The conditions that existed also had the potential to cause scaling after an accident starts. In one instance, it is estimated that this resulted in degrading the performance of Emergency Cooling Water Heat Exchanger 2B to the point where it would not have been capable of performing its intended safety function for approximately 6.8 months in 2003. An apparent violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified because the two procedures that were performed to measure essential cooling water heat exchanger performance were implemented in a way that was inadequate to ensure the timely determination that the requirements and acceptance limits contained in applicable design documents were met. The performance deficiency associated with these apparent violations was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability

3Q/2006 Inspection Findings - Palo Verde 3 Page 3 of 14 of systems needed to mitigate accidents. Specifically, Essential Cooling Water (EW) Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 6.8 months. A Phase 2 significance determination process concluded that this finding has potential safety significance greater than very low safety significance because some accident sequences, notably loss of coolant accidents, were expected to elevate the ultimate heat sink temperature to the point where the degraded essential cooling water heat exchanger would be challenged. This was expected to cause failure of the essential chiller, and the resulting loss of room cooling to safety-related equipment increased the plant risk. In addition, there is uncertainty associated with the amount of scaling that could occur on any of the affected heat exchangers for all three units during 24 hours of an accident scenario. Additional information was needed to perform a final Phase 3 assessment, due to the complexity of the issue Inspection Report# : 2006011(pdf) Significance: TBD Sep 26, 2006 Identified By: NRC Item Type: AV Apparent Violation 50.59 REVIEWS NOT PERFORMED OR INADEQUATE FOR MULTIPLE CHANGES TO SPRAY POND CHEMISTRY CONTROL PROCEDURE A finding with five apparent violations was identified associated with fouling of safety-related heat exchangers cooled by the emergency spray pond system. Between 1995 and May, 2006, the licensee failed to recognize that improperly implemented chemistry controls for the emergency spray pond system caused a significant condition adverse to quality which degraded the performance of all emergency diesel generators and emergency cooling water systems. The degraded performance was primarily due to heat exchanger fouling caused by adding excessive amounts of chemicals. The conditions that existed also had the potential to cause scaling after an accident starts. In one instance, it is estimated that this resulted in degrading the performance of Emergency Cooling Water Heat Exchanger 2B to the point where it would not have been capable of performing its intended safety function for approximately 6.8 months in 2003. An apparent violation of 10 CFR 50.59 was identified for making nine revisions to Procedure 74DP-9CY04, "System Chemistry Specification," a procedure described in the Updated Final Safety Analysis Report, between 1998 and 2004 without performing evaluations of the potential impact of the changes on the safety-related components in the spray pond system; the changes revised spray pond chemistry parameter limits which were subsequently determined to have contributed to heat exchanger fouling. The performance deficiency associated with these apparent violations was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water (EW) Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 6.8 months. A Phase 2 significance determination process concluded that this finding has potential safety significance greater than very low safety significance because some accident sequences, notably loss of coolant accidents, were expected to elevate the ultimate heat sink temperature to the point where the degraded essential cooling water heat exchanger would be challenged. This was expected to cause failure of the essential chiller, and the resulting loss of room cooling to safety-related equipment increased the plant risk. In addition, there is uncertainty associated with the amount of scaling that could occur on any of the affected heat exchangers for all three units during 24 hours of an accident scenario. Additional information was needed to perform a final Phase 3 assessment, due to the complexity of the issue Inspection Report# : 2006011(pdf) Significance: TBD Sep 26, 2006 Identified By: NRC Item Type: AV Apparent Violation INADEQUATE IDENTIFICATION AND CORRECTIVE ACTION FOR DEGRADED EW HEAT EXCHANGER PERFORMANCE A finding with five apparent violations was identified associated with fouling of safety-related heat exchangers cooled by the emergency spray pond system. Between 1995 and May, 2006, the licensee failed to recognize that improperly implemented chemistry controls for the emergency spray pond system caused a significant condition adverse to quality which degraded the performance of all emergency diesel generators and emergency cooling water systems. The degraded performance was primarily due to heat exchanger fouling caused by adding excessive amounts of chemicals. The conditions that existed also had the potential to cause scaling after an accident starts. In one instance, it is estimated that this resulted in degrading the performance of Emergency Cooling Water Heat Exchanger 2B to the point where it would not have been capable of performing its intended safety function for approximately 6.8 months in 2003.

3Q/2006 Inspection Findings - Palo Verde 3 Page 4 of 14 An apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," was identified. On March 19, 2002, performance testing for Essential Cooling Water Heat Exchanger 2B indicated that the system would not be capable of performing its design function, but this significant condition adverse to quality was not promptly identified, the cause determined, or corrective actions taken to restore the required heat exchanger performance. The failure to correct this degraded performance contributed to the continued degradation and eventual loss of function for an estimated period of 6.8 months. The performance deficiency associated with these apparent violations was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water (EW) Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 6.8 months. A Phase 2 significance determination process concluded that this finding has potential safety significance greater than very low safety significance because some accident sequences, notably loss of coolant accidents, were expected to elevate the ultimate heat sink temperature to the point where the degraded essential cooling water heat exchanger would be challenged. This was expected to cause failure of the essential chiller, and the resulting loss of room cooling to safety-related equipment increased the plant risk. In addition, there is uncertainty associated with the amount of scaling that could occur on any of the affected heat exchangers for all three units during 24 hours of an accident scenario. Additional information was needed to perform a final Phase 3 assessment, due to the complexity of the issue Inspection Report# : 2006011(pdf) Significance: TBD Sep 26, 2006 Identified By: NRC Item Type: AV Apparent Violation INADEQUATE DESIGN CONTROL TO ENSURE NO EW HEAT EXCHANGER SCALING An apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for failure to correctly evaluate the scaling potential of the safety-related heat exchangers cooled by the emergency spray pond during a design basis accident. An error in the SEQUIL calculation caused the licensee to incorrectly conclude that scaling would not occur under the conditions established in the chemistry control program. The performance deficiency associated with these apparent violations was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water (EW) Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 6.8 months. A Phase 2 significance determination process concluded that this finding has potential safety significance greater than very low safety significance because some accident sequences, notably loss of coolant accidents, were expected to elevate the ultimate heat sink temperature to the point where the degraded essential cooling water heat exchanger would be challenged. This was expected to cause failure of the essential chiller, and the resulting loss of room cooling to safety-related equipment increased the plant risk. In addition, there is uncertainty associated with the amount of scaling that could occur on any of the affected heat exchangers for all three units during 24 hours of an accident scenario. Additional information was needed to perform a final Phase 3 assessment, due to the complexity of the issue Inspection Report# : 2006011(pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation TWO EXAMPLES OF FAILURE TO TRANSLATE SPRAY POND DESIGN ASSUMPTIONS INTO PLANT PROCEDURES CONTROL Two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," were identified involving the failure to adequately translate the design basis of the spray ponds into procedures. Design Calculation 13-MC-SP-0307, "SP/EW System Thermal Performance Design Basis Analysis," Revision 7, which demonstrated that the spray pond system could adequately limit spray pond temperature during a design basis accident did not account for any reduced heat capacity caused by sediment buildup. However, this fact was not translated into procedures, so approximately 400 cubic yards of sediment had built up in each of the six spray ponds when the team questioned the impact to the heat removal function. Also, the same calculation demonstrated that sufficient water was available to provide adequate cooling during a design basis accident, but did not account for any leakage from the ponds. The team determined that the licensee

3Q/2006 Inspection Findings - Palo Verde 3 Page 5 of 14 did not translate this into a procedure to ensure that the condition of the spray pond was maintained such that leakage did not occur. Procedure 81DP-0ZZ01, "Civil System, Structure, and Component Monitoring Program," Revision 11, was used to monitor the condition of the pond structures. The team identified that it examined only the exposed concrete surfaces, which constituted about 7 percent of the surface area and almost none of the water-containing volume. Cracks had been identified and repaired in this area, but the inspections were not expanded to the underwater surfaces. This issue was documented in Condition Report/Disposition Requests 2906671 and 2910912. Failure to adequately translate the design basis of the spray ponds into procedures was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, the finding could become a more significant safety concern. This finding affected the Mitigating Systems Cornerstone. This performance deficiency screened as having very low safety significance in a Phase 1 significance determination process because the licensee was able to demonstrate that the sediment would not have resulted in a loss of safety function, and that significant leakage did not exist. The licensee was able to revise the calculation to take credit for heat absorption by the concrete walls, and scheduled inspections by divers of underwater portions of the ponds to follow sediment removal Inspection Report# : 2006011(pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation MULTIPLE EXAMPLES OF INADEQUATE OPERABILITY ASSESSMENTS FOR HEAT EXCHANGER DEGRADATION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with multiple examples was identified for failure to adequately assess the impact to operability of degraded heat exchangers in the emergency diesel generators and essential cooling water system. Specifically, the licensee failed to follow Procedure 40DP-9OP26, "Operability Determination and Functional Assessment," Revision 16, in assessing indications of degraded heat exchanger performance, an activity affecting quality. Key support organizations were not always involving operations personnel with questions that had a potential to affect the operability of safety-related equipment, or were informing operators only after the support organization had fully evaluated the condition, delaying actions that were required to be prompt. Also, operations personnel did not always insist on a rigorous evaluation. This issue was documented in Condition Report/Disposition Requests 2918892, 2901815, and 2898237. Failure to adequately implement the operability assessment process was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. This finding screened as having very low safety significance in a Phase 1 significance determination process, because the examples used for this violation were confirmed not to involve any loss of safety function. This finding had cross-cutting aspects in the area of human performance because the licensee did not follow their systematic process for operability decision making when information was not brought to the right decision makers Inspection Report# : 2006011(pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE DEGRADED CONDITIONS TO ENSURE OPERABILITY The inspectors identified two examples of a noncited violation of Technical Specification 5.4.1.a for the failure of engineering personnel to follow procedures. On April 17, 2006, engineering personnel failed to follow Procedure 81DP-0DC13, "Deficiency Work Order," resulting in shutdown cooling Train B being declared operable without fully addressing a potential degraded condition associated with the potential for missing parts from a submersible remaining in plant systems. On May 10, 2006, engineering personnel did not perform evaluations and dispositions required by Procedure 81DP-0DC13 to justify a degraded condition for continued use of a pipe support associated with shutdown cooling line Train A. These issues were entered into the licensee's corrective action program as Condition Report/Disposition Requests 2902258 and 2892737. The finding is greater than minor because it would become a more significant concern if left uncorrected in that Technical Specification required structures, systems, and components (SSCs) may not be operable as required for applicable plant

3Q/2006 Inspection Findings - Palo Verde 3 Page 6 of 14 conditions. The performance deficiency associated with this finding was representative of a broader concern related to how the licensee ensures the operability of SSCs required to comply with Technical Specifications. Specifically, the licensee's programs and processes for assessing degraded conditions have not been implemented with the rigor and thoroughness necessary to ensure compliance with regulatory requirements. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that engineering personnel did not follow procedures, resulting in the failure to perform required evaluations and dispositions for deficient conditions. Inspection Report# : 2006003(pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTED IN DECLARING BOTH TRAINS OF LOW PRESSURE SAFETY INJECTION INOPERABLE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow Procedure 73ST-9SI03, Leak Test of SI/RCS Pressure Isolation Valves, which resulted in declaring both trains of low pressure safety injection inoperable. Specifically, on May 10, 2006, operations personnel inappropriately allowed safety-injection header pressure to exceed 1850 pisg, which rendered the associated low pressure safety injection pumps inoperable. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 2892697. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures and apply the necessary rigor and questioning attitude to requirements and associated decisions because of self-imposed schedule pressures. Inspection Report# : 2006003(pdf) Significance: Mar 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DIESEL FIRE PUMP BATTERY SURVEILLANCE The inspectors identified a noncited violation of Technical Specification 5.4.1.d for an inadequate surveillance test for the diesel fire pump batteries. Specifically, since 1995, the method described in Procedure 38FT-9FP02, "Fire Protection System Monthly Diesel Fire Battery Test," Revision 4, to verify the specific gravity of the diesel fire pump batteries was inadequate in that the specific gravity was not directly measured, but was verified by a correlation to open circuit voltage. This methodology could result in a measured battery voltage that would be higher than the true specific gravity would provide. The cause was due to an inadequate engineering evaluation to develop the correlation used in the surveillance procedure. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2875906. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet and Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process," the finding is determined to have very low safety significance because the fire pump battery performance and reliability is minimally affected since the batteries were replaced every two years, and the required capacity of the batteries is approximately 60 percent of a newly installed battery. Inspection Report# : 2006002(pdf)

3Q/2006 Inspection Findings - Palo Verde 3 Page 7 of 14 Significance: Feb 03, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation UNTIMELY CORRECTIVE ACTIONS FOR FEEDWATER PUMP RESISTOR FAILURES A self-revealing, noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, was identified for failure to correct, and preclude repetition of, a significant condition adverse to quality involving the failure of the turbine driven auxiliary feedwater pump. Specifically, the licensee failed to perform a timely evaluation to determine the cause of the Units 2 and 3 turbine driven auxiliary feedwater pump governor power supply resistor failures. Approximately 7 months following the Unit 2 and 3 failures, the Unit 2 turbine driven auxiliary feedwater pump governor failed again due to the same resistor failure. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2871541 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability of systems that respond to initiating events. The failure of the Unit 2 turbine driven auxiliary feedwater pump governor power supply resistor affected the availability of the auxiliary feedwater system. Using the Phase 1 worksheet in Manual Chapter 0609, Significance Determination Process, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, delays in the evaluation of the resistors failures allowed a subsequent failure prior to completion of the corrective actions. (Section 4OA2e(2)(i) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE TREND OF CONTAMINATED OIL SAMPLES A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct an adverse trend of contaminated oil samples in a timely manner. Specifically, on April 1, 2005, the licensee identified an increasing trend of incorrect lubricant oil additions and contaminated oil samples and entered the deficiency in their corrective action program. As of January 2006, the inspectors concluded that the corrective actions taken as a result of the identified oil control deficiency were untimely, in that, 9 months later the frequency of new instances of oil control problems documented in the corrective action program remained unchanged. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2785915 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in the loss-of-safety function of a single train or system. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, poor work practices resulted in multiple oil contamination events and the corrective actions taken were ineffective in promptly correcting the condition. (Section 4OA2e(2)(ii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MEET MAINTENANCE TEST REQUIREMENTS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified for failure to perform required testing of the Unit 3 essential cooling water system Pump EWP01 breaker in accordance with requirements and acceptance limits. Pump EWP01 breaker test procedure established tolerances and acceptance criteria for the breaker sub-component clearances that were documented as not being met. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2865792 for resolution.

3Q/2006 Inspection Findings - Palo Verde 3 Page 8 of 14 This finding was more than minor since it affected the equipment performance attribute of the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The failure to meet recommended tolerances and acceptance limits specified was similar to Manual Chapter 0612, Appendix E, more than minor example 2.c., in that, the issue was repetitive and affected multiple breakers tested. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because the condition was a qualification deficiency confirmed not to result in loss of function. The cause of the finding is related to the cross-cutting element of human performance in that maintenance personnel failed to properly implement maintenance procedures, and the deficient conditions were not identified by supervisory review of the completed procedures. (Section 4OA2e(2)(iii)) Inspection Report# : 2006008(pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY A MAINTENANCE RULE FUNCTIONAL FAILURE A noncited violation of 10 CFR 50.65(a)(2) was identified for the failure to demonstrate that the performance or condition of the low pressure safety injection/shutdown cooling Pump 2A was adequate. Specifically, in May 2005, the licensee failed to accurately account for 15 hours of unavailability time for the low pressure safety injection/shutdown cooling Pump 2A, which when re-evaluated, exceeded the performance trigger to enter (a)(1) monitoring. The licensee entered this deficiency into their corrective action program as Condition Report Disposition Request 2865315 for resolution. The finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to maintain availability and reliability of structures systems and components needed to respond to initiating events and had a credible impact on safety. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the finding is determined to have very low safety significance because there was no design deficiency and the low pressure safety injection/shutdown cooling Pump 2A failure did not exceed the allowed technical specification outage time. The cause of the finding is related to the cross-cutting element of human performance in that the initial evaluation and subsequent supervisory reviews failed to identify the need for additional monitoring of the low pressure safety injection/shutdown cooling Pump 2A. (Section 4OA2e(2)(v)) Inspection Report# : 2006008(pdf) Significance: N/A Feb 03, 2006 Identified By: NRC Item Type: FIN Finding PERFORMANCE DECLINE IN PROBLEM IDENTIFICATION AND RESOLUTION The inspectors reviewed approximately 175 condition reports, 65 work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. Overall, performance declined when compared to the previous problem identification and resolution assessment. Significant delays in evaluation of the significance of an identified problem, as well as identification of appropriate corrective actions, resulted in large corrective action backlogs, some repeat events, and examples of continued noncompliance. The delays in completion of corrective actions continued to result in a significant number of self-disclosing and NRC-identified violations and findings. While the licensee initiated actions to address the substantive cross-cutting issues in human performance and problem identification and resolution, the majority of the corrective actions were not complete and some of the initial completed actions were not effective. Also, competing priorities between resources and the backlog of corrective actions created a condition where many corrective actions were significantly delayed in their completion, contributing to failures to adequately implement the corrective action process. The team concluded that while a safety-conscious work environment exists at your facility, isolated concerns were raised by your staff during the interviews. These concerns were associated with not having sufficient personnel to accomplish long-term improvements, a loss of trust that management would not subject the staff to negative consequences for raising issues, some confusion about when to place an adverse condition into your corrective action program, and a decrease in confidence that the corrective action program will adequately address problems. (Section 4OA2). Inspection Report# : 2006008(pdf)

3Q/2006 Inspection Findings - Palo Verde 3 Page 9 of 14 Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE CONDITION WITH THE REFUELING WATER TANK INSTRUMENT PIT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the refueling water tank instrument pit. Specifically, in August 2003, the licensee inadvertently cancelled the work orders to correct deficiencies associated with flooding of the refueling water tank instrument pit. This error was identified by the licensee in October 2004; however, corrective actions were inadequate to ensure timely correction of the adverse condition. Additionally, two of the three work orders were inappropriately closed with no work performed following the inspectors' identification of the issue in August 2005. After identification by the inspectors, the licensee installed temporary modifications to prevent water intrusion into the pit. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2838845. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding required a Phase 3 analysis by a senior reactor analyst, since the finding was potentially risk significant due to external initiating event core damage sequences. A senior reactor analyst performed a qualitative assessment and concluded that the finding had very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that corrective actions lacked timeliness, adequacy, and thoroughness. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO DEMONSTRATE EFFECTIVE MAINTENANCE OF HOT LEG RESISTANCE TEMPERATURE DETECTORS The inspectors identified a noncited violation of 10 CFR 50.65(a)(2) for the failure to demonstrate that the performance or condition of three reactor coolant system resistance temperature detectors had been effectively controlled and monitored against licensee-established goals. Specifically, the licensee failed to identify, and properly account for, three detector functional failures occurring from May 31, 2004 to June 23, 2005. Consequently, the licensee did not establish appropriate goal setting and monitoring for the detectors. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2856282. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the licensee failed to identify the need to perform a maintenance rule functional failure review for failed resistance temperature detectors. Inspection Report# : 2005005(pdf) Significance: Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO CORRECT AN IDENTIFIED ADVERSE CONDITION ASSOCIATED WITH MAINTENANCE DEPARTMENT GUIDELINES The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure to correct a condition adverse to quality involving the use of Maintenance Department Guidelines. Specifically,

3Q/2006 Inspection Findings - Palo Verde 3 Page 10 of 14 instrumentation and controls personnel did not complete actions used as a basis for closure for Condition Report/Disposition Request 2715129. In addition, the extent of condition review did not identify the continued active use of Maintenance Department Guidelines to perform quality related activities. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2830633. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the loss of safety function of any component, train, or system. The cause of the finding is related to the crosscutting element of problem identification and resolution in that maintenance personnel did not implement timely corrective actions and performed a poor extent of condition review. Inspection Report# : 2005005(pdf) Significance: SL-IV Dec 31, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT LER TO REPORT SHUTDOWN REQUIRED BY TECHNICAL SPECIFICATIONS The inspectors identified a noncited Severity Level IV violation of 10 CFR 50.73 for the failure to submit a licensee event report within 60 days to report the completion of a plant shutdown required by the Technical Specifications. A second similar example of a violation of the same regulation was identified by the licensee. Specifically, the licensee was required to submit a licensee event report by May 17, 2005, to report the completion of a plant shutdown required by the Technical Specifications that occurred on March 18, 2005. This licensee event report was submitted on November 7, 2005. Additionally, the licensee was required to submit a licensee event report by April 10, 2005, to report the completion of a plant shutdown that occurred on February 9, 2005. A revised licensee event report was submitted on January 6, 2006. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2829976 and 2844019. The finding was determined to be applicable to traditional enforcement because the NRC's ability to perform this regulatory function was potentially impacted by the licensee's failure to report the event. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. The cause of the finding is related to the crosscutting element of problem identification and resolution in that the transportability review, conducted by regulatory affairs personnel, failed to identify an additional example of a missed reportable event that was subsequently identified by the NRC. Inspection Report# : 2005005(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR EMERGENCY CORE COOLING SYSTEM SUMP AND REFUELING WATER TANK SWAPOVER The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," related to potential air entrainment into the emergency core cooling system suction header from the refueling water tank. Specifically, the inspectors determined that the water level in the refueling water tank could fall below the level of the tank discharge pipe and associated vortex breaker during the transfer from the refueling water tank to the containment sump during design basis accidents. As a result, air could be drawn into the emergency core cooling system piping under accident conditions. This issue was applicable to both trains of all three units. Contrary to proper design control, engineering personnel failed to effectively implement design requirements to prevent potential air entrainment into the emergency core cooling system. The inspectors considered this finding to be more than minor, in accordance with NRC Manual Chapter 0612, "Power Reactor Inspection Reports," since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of design and configuration control. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because

3Q/2006 Inspection Findings - Palo Verde 3 Page 11 of 14 there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2835132), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation IMPROPER DESIGN CONTROL FOR REFUELING WATER TANK LEVEL INSTRUMENT CALIBRATION The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion III, "Design Control," for failure to translate design basis information into the calibration of refueling water tank level instruments. Without this information, operators were unaware that a Technical Specification listed minimum level in this tank may not provide sufficient usable volume of water for emergency core cooling system operation. Specifically, engineers failed to density compensate these instruments for allowable ranges of both temperature and boric acid concentration of the tank. Contrary to proper design control, the licensee failed to effectively implement design requirements to ensure operability of the refueling water tank. This issue was determined to affect the Mitigating Systems cornerstone and was more than minor based upon review of Example 3.j of Manual Chapter 0612, Appendix E. The errors were considered more than a minor calculation error because the deficiencies required re-performance of the calculations, significantly reduced the overall margin, and could be applicable to other such instrumentation calculations. However, engineering personnel demonstrated that while there was a loss of margin, there was no actual loss of function because of the inaccuracies in the RWT level instrument calibrations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the inspectors determined that the issue was of very low safety significance (Green) because there was no actual loss of safety function. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as condition report/disposition request (CRDR 2840920), this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. Inspection Report# : 2005012(pdf) Significance: Dec 16, 2005 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROPERLY IMPLEMENT STATION PROCEDURE FOR EQUIPMENT OPERABILITY (TECHNICAL SPECIFICATION 5.4.1.a) The inspectors identified three examples of a (Green) noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings." Specifically, these examples involved the licensee's failure to follow a procedure and to provide appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished, consistent with the facility's administrative procedure for the operability determination process. In the first case an engineer evaluated a concern in a condition report/disposition request without notifying the control room so an operability assessment could be performed. In the other cases, there was inadequate guidance given to operators to address when an operability assessment would be required. The inspectors considered this finding to be more than minor, in accordance with Manual Chapter 0612, since it potentially affected the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, and it affected the attributes of procedure quality and human performance. However, subsequent evaluations completed by the licensee verified that actual safety functions were not lost in any of these examples. The inspectors performed a Phase 1 significance determination, using NRC Manual Chapter 0609, and determined this issue screens out as having very low safety significance (Green) because a safety function was not lost. Because the violation was determined to be of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626, this violation is being treated as a noncited violation, consistent with Section VI.A of the NRC Enforcement Policy. The inspectors also determined this issue had cross-cutting aspects of human performance. Specifically, the licensee's attention to detail was lacking and there was poor inter- and intra-group coordination.

3Q/2006 Inspection Findings - Palo Verde 3 Page 12 of 14 The inspectors identified an additional example of the Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," described in NRC Supplemental Inspection Report 05000528; 05000529; 05000530/2005012, for the failure to establish an adequate procedure and implement existing procedures involving implementation of the operability determination process. The inspectors also identified examples where information provided to operations from engineering was not sufficiently accurate or complete to support operational decision making with respect to capacitor service life and the overall impact of the identified degraded or non-conforming capacitors. On November 1, 2005, the licensee inappropriately determined that the operability determination process was not applicable for a degraded capacitor condition that had the potential to impact Class 1E inverter operability. Consequently, the degraded condition was evaluated outside the operability determination process. Because the finding is of very low safety significance and has been entered into the corrective action program as Condition Report/Disposition Request 2838626. The cause of the finding is related to the crosscutting element of human performance in that communications between the engineering and operations organizations was inadequate. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 SEVERITY LEVEL III VIOLATION FOR 50.59 ISSUE The U.S. Nuclear Regulatory Commission (NRC) performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with an inappropriate change to an emergency core cooling system procedure without prior NRC approval. This procedure change rendered portions of the system inoperable because of voiding. This performance issue was previously characterized as a Severity Level III violation of 10 CFR 50.59 and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. During this supplemental inspection, performed in accordance with Inspection Procedure 95002, the inspectors determined that the licensee's evaluation identified the primary root causes of the performance issue to be: (1) The site procedure revision process (01AC-0AP02) was inadequate, in that, the procedure allowed pre-screening' of changes that could potentially bypass performing a 10 CFR 50.59 screening for changes to the facility as described in the licensing basis; and (2) The corrective action program implementation was ineffective. The licensee also identified overlap and interface problems between the corrective action program, the engineering evaluation request program, and the instruction change request program. These issues, in conjunction with inadequate training to recognize a corrective action condition, contributed to the failure of station personnel to initiate a corrective action program input document in 1992 for the potential pipe voiding concern. The inspectors concluded that the licensee's evaluation and implemented corrective actions were appropriate to reasonably prevent repetition of the 10 CFR 50.59 violation. Given the licensee's acceptable performance in addressing the inappropriate procedure change and 10 CFR 50.59 program deficiencies, the Severity Level III violation is closed. Inspection Report# : 2005012(pdf) Significance: N/A Dec 16, 2005 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 INSPECTORS ASSESSMENT OF IR2004-14 (YELLOW) 10CFR50, APP B, CRITERION III VIOLATION The NRC performed this supplemental inspection, in part, to assess the licensee's evaluation and corrective actions associated with potential air entrainment into the emergency core cooling system. The licensee failed to incorporate original design requirements into the plant to maintain piping between the containment sump isolation valves filled with water. This performance issue was previously characterized as a 10 CFR 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 529; 530/2004014. The inspectors determined that the licensee's evaluation identified a direct cause, nine root causes, and nine contributing causes of the performance issue. The evaluation was also used to develop an extensive list of corrective actions. The inspectors found the licensee's methods of evaluation to be appropriate. The NRC concluded that, while the licensee performed an adequate root cause evaluation of the Design Control violation, certain corrective actions were incomplete at the time of this inspection. Specifically, the team determined that for each of

3Q/2006 Inspection Findings - Palo Verde 3 Page 13 of 14 the root and contributing causes, not all corrective actions were sufficiently developed to ensure that the identified performance deficiencies were adequately addressed. In addition, some of the corrective actions were narrowly focused, or the implementation of those actions was not fully effective. Also, the team concluded that criteria and reviews were not established, for auditing or followup, to ensure that corrective actions were effective in improving performance in the affected areas. Consequently, the team did not have assurance that the planned corrective actions were sufficient to address the causes for the performance deficiencies associated with the violation. Therefore, the (Yellow) violation (VIO 2004/014-

01) will remain open for further NRC review.

Inspection Report# : 2005012(pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002(pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {NOTE: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue will be inspected within the scope of a supplemental 95002 inspection in August - September, 2005. Inspection Report# : 2004014(pdf)

3Q/2006 Inspection Findings - Palo Verde 3 Page 14 of 14 Barrier Integrity Emergency Preparedness Occupational Radiation Safety Significance: Mar 31, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW RADIATION EXPOSURE PERMIT INSTRUCTIONS The inspector reviewed a self-revealing, noncited violation of Technical Specification 5.4.1.a, resulting from two radiation workers failure to follow radiation exposure permit instructions. On November 22, 2005, two radiation workers, without notifying radiation protection staff, used a pneumatic grinder with a wire wheel inside of the Unit-1 Steam Generator No. 2 cold leg pipe. As a result of the wire wheel grinding, both workers were contaminated. Radiation protection staff members were not made aware of the contamination event until the workers alarmed the PM-7 portal monitor upon attempting egress from the 140-foot radiological controlled area. One worker received unplanned and unintended internal dose of 6 millirem. The other worker did not receive an internal dose. As corrective action, the licensee counseled the two workers and their supervision, and informed the contractors management. The finding was greater than minor because it was associated with one of the cornerstone attributes (exposure control) and the finding affected the occupational radiation safety cornerstone objective, in that a failure to follow radiation exposure permit instructions resulted in additional radiation dose. The inspector determined that the finding had no more than very low safety significance because: (1) it did not involve an ALARA finding, (2) there was no personnel overexposure, (3) there was no substantial potential for personnel overexposure, and (4) the finding did not compromise the licensees ability to assess dose. The finding also had crosscutting aspects related to human performance, in that, radiation workers failed to follow the radiation exposure permit instructions, which directly resulted in the finding. Inspection Report# : 2006002(pdf) Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : December 21, 2006

4Q/2006 Inspection Findings - Palo Verde 3 Page 1 of 15 Palo Verde 3 4Q/2006 Plant Inspection Findings Initiating Events Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation UNINTENTIONAL TRANSFER OF CVCS INVENTORY TO HIGH ACTIVITY SPENT RESIN TANK A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures that resulted in an unintended transfer of water from the chemical volume and control system to the high activity spent resin tank during a resin transfer. Specifically, on September 8, 2006, operations personnel failed to properly implement Procedure 40OP-9CH02, Step 5.3.2, to isolate the purification ion exchanger. Additionally, operations personnel failed to inform the shift manager or control room supervisor prior to starting the evolution as required by Procedure 40OP-9SR02, Step 4.3.8. The improper valve alignment resulted in the diversion of approximately 1500 gallons of water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2923263. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the initiating events cornerstone and did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not effectively utilize human error prevention techniques, such as holding pre-job briefings, self and peer checking, and proper documentation of activities. The improper use of human error prevention techniques caused a diversion of 1500 gallons of water Inspection Report# : 2006004 (pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation EMERGENCY DIESEL TRIP DURING TESTING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of maintenance personnel to follow procedures. Specifically, on April 2, 2006, maintenance personnel failed to follow Procedure 73ST-9DG02, "Class 1E Diesel Generator and Integrated Safeguards Test, Train B," by installing a jumper on the incorrect relay while testing the overcurrent trip. This resulted in an emergency diesel generator trip and de-energization of safety-related Bus PBB-S04. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2880952. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that maintenance personnel did not follow procedures due to self-imposed schedule pressures.

4Q/2006 Inspection Findings - Palo Verde 3 Page 2 of 15 Inspection Report# : 2006003 (pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTING IN SPENT FUEL POOL DRAIN DOWN AND SPILL IN THE FUEL BUILDING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, between April 7 and April 12, 2006, operations personnel did not follow Procedure 40OP-9PC06, Fuel Pool Clean Up and Transfer, Revision 37, Appendix AU, resulting in Valve PCN-V119, Cleanup Header Return to the Fuel Canal, being improperly aligned. This resulted in an inadvertent transfer of approximately 1200 gallons of spent fuel pool water to the transfer canal and a spill of contaminated water onto the 120 foot and 100 foot elevations of the fuel building. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2884054. The finding is greater than minor because it is associated with the configuration control and human performance cornerstone attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by NRC management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures due to poor human error prevention techniques. Inspection Report# : 2006003 (pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW GTG SURVEILLANCE PROCEDURE CAUSES LOSS OF POWER TO SAFETY-RELATED BUS A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedure. Specifically, on May 6, 2006, operations personnel failed to achieve a current of approximately zero amperes through Breaker NAN-S03A prior to opening the offsite supply breaker to Bus PBA-S03 as required by Procedure 40OP-9GT01, "Gas Turbine Generator Isochronous Test." This resulted in the loss of power to safety-related Bus PBA-S03 and an actuation of emergency diesel generator Train A. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2891404. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that poor attention to detail by operations personnel resulted in the loss of power to a safety bus. Inspection Report# : 2006003 (pdf)

4Q/2006 Inspection Findings - Palo Verde 3 Page 3 of 15 Mitigating Systems Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, states, in part, that for significant conditions adverse to quality, measures shall assure that the cause of the condition is determined and corrective action taken to preclude repetition. Specifically, on July 26, 2006, the licensee failed to assure that the cause of a significant condition adverse to quality was determined and that corrective action was taken to preclude repetition. Specifically, the licensee did not identify and correct the cause of the erratic Unit 3, Train A Emergency Diesel Generator K-1 relay operation prior to installation of the relay on July 26, 2006. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of problem identification and resolution in that the failure to fully evaluate and implement adequate corrective maintenance actions for the Unit 3 Train A emergency diesel generator resulted in the emergency diesel generator being inoperable for 18 days. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: TBD Nov 30, 2006

4Q/2006 Inspection Findings - Palo Verde 3 Page 4 of 15 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT THE OPERABILITY DETERMINATION PROCESS The team identified two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform operabilty determinations. In both examples, the licensee failed to perform an operability determination following identification of a degraded condition that had the potential to adversely affect the safety function of all emergency diesel generators. Specifically, an operability determination was not performed after identifying the failure of the Unit 3 Train A emergency diesel generator on July 25, 2006, was potentially the result of plastic debris affecting proper auxiliary contact operation of a K-1 relay. The licensee determined the debris most likely originated from a modification performed on all emergency diesel generator K-1 relays during initial plant startup. Following another failure of the Unit 3 Train A emergency diesel generator on September 22, 2006, an operability determination was not performed after identifying the failure was the result of the K-1 relay actuating arm not providing adequate compression of the auxiliary contacts. The licensee determined this degraded condition most likely originated during implementation a modification done to all emergency diesel generator K-1 relays during initial plant startup. This finding is greater than minor because the failure to follow the operability determination process, if left uncorrected, would become a more significant safety concern in that degraded or nonconforming conditions would not be properly evaluated. Using the Phase 1 worksheet in NRC Inspection Manual Chapter 0609, Significance Determination Process, the finding was determined to have very low safety significance because unreliable K-1 relay operation resulted in no actual loss of safety function of the other five emergency diesel generators prior to corrective actions being implemented, and the finding did not represent a potential risk significant condition because of a seismic, flooding, or severe weather event. This issue is documented in the licensees corrective action program as Condition Report/Disposition Requests 2928389 and 2940558. The cause of this finding is related to the crosscutting element of problem identification and resolution in that engineering personnel failed to properly evaluate and perform operability determinations for identified degraded conditions affecting the emergency diesel generators. Inspection Report# : 2006012 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS TO PRECLUDE WATER INTRUSION AND CORROSION OF UNDERGROUND PIPING AT THE FACILITY The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to promptly correct water intrusion problems in multiple areas in the facility, that were identified and examined from January 1991 to April 2006. Specifically, the licensee failed to promptly correct the water intrusion problems in the facility piping vaults and manholes. This finding also had aspects of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for failing to maintain a vault in its watertight design condition and to coat exposed piping with its specified coating to ensure corrosion protection. This issue was entered into the licensees corrective action program as Condition Report/Disposition Requests 2885972, 2880283, and 2902572. The finding is greater than minor because it is associated with the equipment performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609," Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and there was no actual loss of piping material that exceeded the minimum allowable wall thickness or a loss of safety function that exceeded Technical Specification allowed outage times. This finding has a crosscutting aspect in the area of problem identification and resolution because the licensee failed to thoroughly evaluate a problem that existed from 1992 to April 2006. The failure to promptly correct this condition resulted in the degradation of the wall thickness of the spray pond piping and the Unit 3 emergency diesel generator Train A being declared inoperable after the fuel transfer pump did not meet the acceptance criteria during a surveillance Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC

4Q/2006 Inspection Findings - Palo Verde 3 Page 5 of 15 Item Type: NCV NonCited Violation TESTING PERFORMED BEYOND THE SCOPE OF THE FUNCTIONAL RELEASE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow procedures for plant modifications when performing a surveillance test that impacted a component that had been recently modified. Specifically, on April 25, 2006, operations personnel used flow Element 3JSIBFE0348, a modified component that did not have a functional release, to perform surveillance testing of emergency core cooling system check valves. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2887268. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not follow established procedures. The failure to follow procedures resulted in the performance of testing not allowed by a functional release Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY CONDITIONS ADVERSE TO QUALITY FOR THE EMERGENCY DIESEL GENERATORS The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to identify degraded material conditions on the emergency diesel generators. Between July and September 2006, operations and engineering personnel did not promptly identify and correct material conditions adverse to quality. Specifically, operations and engineering personnel did not identify numerous fluid leaks, and loose and missing fasteners on the emergency diesel generator skid, and did not enter them in the corrective action program. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2914886. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that unidentified conditions adverse to quality could challenge the operability of equipment important to safety. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of problem identification and resolution because failing to implement the corrective action program with a low threshold for identifying adverse material conditions resulted in degradation of the emergency diesel generators which was not being tracked and evaluated Inspection Report# : 2006004 (pdf) Significance: SL-IV Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT COMPLETE REVISIONS TO THE UPDATED FINAL SAFETY ANALYSIS REPORT FOR PERMANENT MODIFICATIONS The inspectors identified a noncited violation of 10 CFR 50.71(e)(4) for the failure to file revisions to the Updated Final Safety Analysis Report. Specifically, Procedure 93DP-0LC03, "Licensing Document Maintenance," Revision 13, Step 3.5.6, required that temporary modifications that are in place for greater than 24 months be incorporated into the Updated Final Safety Analysis Report. Temporary modifications for heated junction thermocouples were installed for greater than 24 months and a revision to the Updated Final Safety Analysis Report was not made. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2894741. The performance deficiency associated with this finding involved the failure of licensee personnel to submit revisions to the Updated Final Safety Analysis Report reflecting temporary modifications installed in Unit 3 for more than 24 months. The finding was determined to be applicable to traditional enforcement because the NRCs ability to perform its regulatory

4Q/2006 Inspection Findings - Palo Verde 3 Page 6 of 15 function was potentially impacted by the licensees failure to revise the Updated Final Safety Analysis Report in a timely manner. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. This finding has a crosscutting aspect in the area of human performance associated with work practices because not following established procedures led to an inaccurate Updated Final Safety Analysis Report Inspection Report# : 2006004 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation TWO EXAMPLES OF FAILURE TO TRANSLATE SPRAY POND DESIGN ASSUMPTIONS INTO PLANT PROCEDURES CONTROL Two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," were identified involving the failure to adequately translate the design basis of the spray ponds into procedures. Design Calculation 13-MC-SP-0307, "SP/EW System Thermal Performance Design Basis Analysis," Revision 7, which demonstrated that the spray pond system could adequately limit spray pond temperature during a design basis accident did not account for any reduced heat capacity caused by sediment buildup. However, this fact was not translated into procedures, so approximately 400 cubic yards of sediment had built up in each of the six spray ponds when the team questioned the impact to the heat

4Q/2006 Inspection Findings - Palo Verde 3 Page 7 of 15 removal function. Also, the same calculation demonstrated that sufficient water was available to provide adequate cooling during a design basis accident, but did not account for any leakage from the ponds. The team determined that the licensee did not translate this into a procedure to ensure that the condition of the spray pond was maintained such that leakage did not occur. Procedure 81DP-0ZZ01, "Civil System, Structure, and Component Monitoring Program," Revision 11, was used to monitor the condition of the pond structures. The team identified that it examined only the exposed concrete surfaces, which constituted about 7 percent of the surface area and almost none of the water-containing volume. Cracks had been identified and repaired in this area, but the inspections were not expanded to the underwater surfaces. This issue was documented in Condition Report/Disposition Requests 2906671 and 2910912. Failure to adequately translate the design basis of the spray ponds into procedures was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, the finding could become a more significant safety concern. This finding affected the Mitigating Systems Cornerstone. This performance deficiency screened as having very low safety significance in a Phase 1 significance determination process because the licensee was able to demonstrate that the sediment would not have resulted in a loss of safety function, and that significant leakage did not exist. The licensee was able to revise the calculation to take credit for heat absorption by the concrete walls, and scheduled inspections by divers of underwater portions of the ponds to follow sediment removal Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation MULTIPLE EXAMPLES OF INADEQUATE OPERABILITY ASSESSMENTS FOR HEAT EXCHANGER DEGRADATION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with multiple examples was identified for failure to adequately assess the impact to operability of degraded heat exchangers in the emergency diesel generators and essential cooling water system. Specifically, the licensee failed to follow Procedure 40DP-9OP26, "Operability Determination and Functional Assessment," Revision 16, in assessing indications of degraded heat exchanger performance, an activity affecting quality. Key support organizations were not always involving operations personnel with questions that had a potential to affect the operability of safety-related equipment, or were informing operators only after the support organization had fully evaluated the condition, delaying actions that were required to be prompt. Also, operations personnel did not always insist on a rigorous evaluation. This issue was documented in Condition Report/Disposition Requests 2918892, 2901815, and 2898237. Failure to adequately implement the operability assessment process was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. This finding screened as having very low safety significance in a Phase 1 significance determination process, because the examples used for this violation were confirmed not to involve any loss of safety function. This finding had cross-cutting aspects in the area of human performance because the licensee did not follow their systematic process for operability decision making when information was not brought to the right decision makers Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE TEST CONTROL TO PROMPTLY IDENTIFY UNACCEPTABLE HEAT EXCHANGER PERFORMANCE TEST RESULTS - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified. Test Procedure 70TI-9EW01, "Thermal Performance Testing of Essential Cooling Water Heat Exchangers," and Procedure 73DP-9ZZ10, "Guidelines for Heat Exchanger Thermal Performance Analysis," were inadequate to ensure the timely determination that the requirements and acceptance limits contained in applicable design documents were met. Specifically, performance testing for Essential Cooling Water Heat Exchanger 2B conducted on March 19, 2002, did not meet the design basis requirements specified in Calculation 13-MC-SP-0307, "SP/EW System Performance Design Bases Analysis," Revision 007, but this was not correctly evaluated to determine whether the system would be capable of performing its design

4Q/2006 Inspection Findings - Palo Verde 3 Page 8 of 15 function until August 22, 2002, due to incorrect procedure guidance and lack of requirements to ensure timely evaluation. As a result, this component continued to degrade for 18 months after demonstrating unacceptable performance. This finding had cross cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. Failure to properly control testing and properly identify unacceptable performance was a performance deficiency. This finding was more than minor because it impacted the procedure quality attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has a very low safety significance. This issue was entered into the Corrective Action Program under CRDR 2928230. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-02, Inadequate Test Control to Promptly Identify Unacceptable Performance Test Results. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: SL-IV Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation 10 CFR 50.59 REVIEWS NOT PERFORMED OR INADEQUATE FOR MULTIPLE CHANGES TO SPRAY POND CHEMISTRY CONTROL PROCEDURE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. SL-IV. A noncited violation of 10 CFR 50.59 was identified for making nine revisions to Procedure 74DP-9CY04, "System Chemistry Specification," a procedure described in the Updated Final Safety Analysis Report between 1998 and 2004. Specifically, the licensee failed to perform evaluations for Revisions 3, 6, 8, 10, 12, 24, 28, 32, and 36 and performed inadequate evaluations for Revisions 10 and 36, to assess the potential impact of the changes on the safety-related components in the spray pond system. Each of these changes revised spray pond chemistry parameter limits which were subsequently determined to have contributed to heat exchanger fouling. Failure to adequately evaluate the impact of changes to the Chemistry Control Program was a performance deficiency. Because this violation had the potential to impact the NRCs regulatory function, and because the associated significance was determined to be Green using Phase 3 of the significance determination process, this violation is being treated as a Severity Level IV violation. This issue was entered into the Corrective Action Program under CRDR 2902498. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-03, 50.59 Reviews Not Performed or Inadequate for Multiple Changes to Spray Pond Chemistry Control Procedure. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE IDENTIFICATION AND CORRECTIVE ACTION FOR DEGRADED ESSENTIAL COOLING WATER HEAT EXCHANGER PERFORMANCE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," was identified. On March 19, 2002, performance testing for Essential Cooling Water Heat Exchanger 2B indicated that the system would not be capable of performing its design function, but this significant condition adverse to quality was not promptly identified, the cause determined, or corrective actions taken to restore the required heat exchanger performance. Specifically, the unacceptable performance was not promptly identified, because the test results were not correctly calculated until August 22, 2002, which was after operating mode changes and returning the unit to power following the outage. When the test results were finalized, the fact was that the design basis capability was not met, was not recognized or entered into the corrective action program. These failures to correct this degraded performance contributed to the continued degradation and

4Q/2006 Inspection Findings - Palo Verde 3 Page 9 of 15 eventual loss of function for a period of 78 days. The failure to correct this degraded performance contributed to the continued degradation and eventual loss of function. This finding had cross cutting aspects associated with the Corrective Action Program, for both inadequate identification of problems and inadequate evaluation of the cause, extent, and impact on operability. Failure to properly assess the impact of scaling on safety-related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, the heat exchangers associated with emergency diesel generators and essential cooling water systems in both trains in all units were allowed to degrade and Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has very low safety significance. This issue was entered into the corrective action program under CRDR 2897810. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-04, Inadequate Corrective Action for Degraded EW Heat Exchanger Performance. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DESIGN CONTROL TO ENSURE NO ESSENTIAL COOLING WATER HEAT EXCHANGER SCALING - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for failure to correctly evaluate the scaling potential of the safety-related heat exchangers cooled by the emergency spray pond during a design basis accident. An error in how the licensee interpreted the SEQUIL calculation caused the licensee to incorrectly conclude that scaling would not occur under the conditions established in the chemistry control program. Failure to properly assess the impact of scaling on safety related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the design control attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, post accident scaling was determined to reduce heat exchanger performance by 2.3 percent of the design capability in the first 24 hours, and up to 4 percent during the design mission time. A Phase 3 significance determination process concluded that this finding has very low safety significance. This finding had cross-cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. This issue was documented in CRDR 2913430. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-05, Inadequate Design Control to Ensure No EW Heat Exchanger Scaling. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE DEGRADED CONDITIONS TO ENSURE OPERABILITY The inspectors identified two examples of a noncited violation of Technical Specification 5.4.1.a for the failure of engineering personnel to follow procedures. On April 17, 2006, engineering personnel failed to follow Procedure 81DP-0DC13, "Deficiency Work Order," resulting in shutdown cooling Train B being declared operable without fully addressing a potential degraded condition associated with the potential for missing parts from a submersible remaining in plant systems. On May 10, 2006, engineering personnel did not perform evaluations and dispositions required by Procedure 81DP-0DC13 to justify a degraded condition for continued use of a pipe support associated with shutdown cooling line Train A. These issues were entered into the licensee's corrective action program as Condition Report/Disposition Requests

4Q/2006 Inspection Findings - Palo Verde 3 Page 10 of 15 2902258 and 2892737. The finding is greater than minor because it would become a more significant concern if left uncorrected in that Technical Specification required structures, systems, and components (SSCs) may not be operable as required for applicable plant conditions. The performance deficiency associated with this finding was representative of a broader concern related to how the licensee ensures the operability of SSCs required to comply with Technical Specifications. Specifically, the licensee's programs and processes for assessing degraded conditions have not been implemented with the rigor and thoroughness necessary to ensure compliance with regulatory requirements. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that engineering personnel did not follow procedures, resulting in the failure to perform required evaluations and dispositions for deficient conditions. Inspection Report# : 2006003 (pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTED IN DECLARING BOTH TRAINS OF LOW PRESSURE SAFETY INJECTION INOPERABLE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow Procedure 73ST-9SI03, Leak Test of SI/RCS Pressure Isolation Valves, which resulted in declaring both trains of low pressure safety injection inoperable. Specifically, on May 10, 2006, operations personnel inappropriately allowed safety-injection header pressure to exceed 1850 pisg, which rendered the associated low pressure safety injection pumps inoperable. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 2892697. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures and apply the necessary rigor and questioning attitude to requirements and associated decisions because of self-imposed schedule pressures. Inspection Report# : 2006003 (pdf) Significance: Mar 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DIESEL FIRE PUMP BATTERY SURVEILLANCE The inspectors identified a noncited violation of Technical Specification 5.4.1.d for an inadequate surveillance test for the diesel fire pump batteries. Specifically, since 1995, the method described in Procedure 38FT-9FP02, "Fire Protection System Monthly Diesel Fire Battery Test," Revision 4, to verify the specific gravity of the diesel fire pump batteries was inadequate in that the specific gravity was not directly measured, but was verified by a correlation to open circuit voltage. This methodology could result in a measured battery voltage that would be higher than the true specific gravity would provide. The cause was due to an inadequate engineering evaluation to develop the correlation used in the surveillance procedure. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2875906. The finding is greater than minor because it is associated with the procedure quality cornerstone attribute of mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet and Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process," the finding is determined to have very low safety significance because the fire pump battery performance and reliability is minimally affected since the batteries were replaced every two years, and the required

4Q/2006 Inspection Findings - Palo Verde 3 Page 11 of 15 capacity of the batteries is approximately 60 percent of a newly installed battery. Inspection Report# : 2006002 (pdf) Significance: Feb 03, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation UNTIMELY CORRECTIVE ACTIONS FOR FEEDWATER PUMP RESISTOR FAILURES A self-revealing, noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, was identified for failure to correct, and preclude repetition of, a significant condition adverse to quality involving the failure of the turbine driven auxiliary feedwater pump. Specifically, the licensee failed to perform a timely evaluation to determine the cause of the Units 2 and 3 turbine driven auxiliary feedwater pump governor power supply resistor failures. Approximately 7 months following the Unit 2 and 3 failures, the Unit 2 turbine driven auxiliary feedwater pump governor failed again due to the same resistor failure. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2871541 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability of systems that respond to initiating events. The failure of the Unit 2 turbine driven auxiliary feedwater pump governor power supply resistor affected the availability of the auxiliary feedwater system. Using the Phase 1 worksheet in Manual Chapter 0609, Significance Determination Process, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in an actual loss of safety function. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, delays in the evaluation of the resistors failures allowed a subsequent failure prior to completion of the corrective actions. (Section 4OA2e(2)(i) Inspection Report# : 2006008 (pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO PROMPTLY CORRECT AN ADVERSE TREND OF CONTAMINATED OIL SAMPLES A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," was identified for the failure to correct an adverse trend of contaminated oil samples in a timely manner. Specifically, on April 1, 2005, the licensee identified an increasing trend of incorrect lubricant oil additions and contaminated oil samples and entered the deficiency in their corrective action program. As of January 2006, the inspectors concluded that the corrective actions taken as a result of the identified oil control deficiency were untimely, in that, 9 months later the frequency of new instances of oil control problems documented in the corrective action program remained unchanged. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2785915 for resolution. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because it only affected the mitigating systems cornerstone and did not result in the loss-of-safety function of a single train or system. The cause of the finding is related to the cross-cutting element of problem identification and resolution, in that, poor work practices resulted in multiple oil contamination events and the corrective actions taken were ineffective in promptly correcting the condition. (Section 4OA2e(2)(ii)) Inspection Report# : 2006008 (pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MEET MAINTENANCE TEST REQUIREMENTS A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified for failure to perform required testing of the Unit 3 essential cooling water system Pump EWP01 breaker in accordance with requirements and acceptance limits. Pump EWP01 breaker test procedure established tolerances and acceptance criteria for the breaker sub-

4Q/2006 Inspection Findings - Palo Verde 3 Page 12 of 15 component clearances that were documented as not being met. The licensee entered the deficiency into their corrective action program as Condition Report Disposition Request 2865792 for resolution. This finding was more than minor since it affected the equipment performance attribute of the Mitigating Systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The failure to meet recommended tolerances and acceptance limits specified was similar to Manual Chapter 0612, Appendix E, more than minor example 2.c., in that, the issue was repetitive and affected multiple breakers tested. Using Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding was determined to have very low safety significance because the condition was a qualification deficiency confirmed not to result in loss of function. The cause of the finding is related to the cross-cutting element of human performance in that maintenance personnel failed to properly implement maintenance procedures, and the deficient conditions were not identified by supervisory review of the completed procedures. (Section 4OA2e(2)(iii)) Inspection Report# : 2006008 (pdf) Significance: Feb 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY A MAINTENANCE RULE FUNCTIONAL FAILURE A noncited violation of 10 CFR 50.65(a)(2) was identified for the failure to demonstrate that the performance or condition of the low pressure safety injection/shutdown cooling Pump 2A was adequate. Specifically, in May 2005, the licensee failed to accurately account for 15 hours of unavailability time for the low pressure safety injection/shutdown cooling Pump 2A, which when re-evaluated, exceeded the performance trigger to enter (a)(1) monitoring. The licensee entered this deficiency into their corrective action program as Condition Report Disposition Request 2865315 for resolution. The finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to maintain availability and reliability of structures systems and components needed to respond to initiating events and had a credible impact on safety. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheet, the finding is determined to have very low safety significance because there was no design deficiency and the low pressure safety injection/shutdown cooling Pump 2A failure did not exceed the allowed technical specification outage time. The cause of the finding is related to the cross-cutting element of human performance in that the initial evaluation and subsequent supervisory reviews failed to identify the need for additional monitoring of the low pressure safety injection/shutdown cooling Pump 2A. (Section 4OA2e(2)(v)) Inspection Report# : 2006008 (pdf) Significance: N/A Feb 03, 2006 Identified By: NRC Item Type: FIN Finding PERFORMANCE DECLINE IN PROBLEM IDENTIFICATION AND RESOLUTION The inspectors reviewed approximately 175 condition reports, 65 work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. Overall, performance declined when compared to the previous problem identification and resolution assessment. Significant delays in evaluation of the significance of an identified problem, as well as identification of appropriate corrective actions, resulted in large corrective action backlogs, some repeat events, and examples of continued noncompliance. The delays in completion of corrective actions continued to result in a significant number of self-disclosing and NRC-identified violations and findings. While the licensee initiated actions to address the substantive cross-cutting issues in human performance and problem identification and resolution, the majority of the corrective actions were not complete and some of the initial completed actions were not effective. Also, competing priorities between resources and the backlog of corrective actions created a condition where many corrective actions were significantly delayed in their completion, contributing to failures to adequately implement the corrective action process. The team concluded that while a safety-conscious work environment exists at your facility, isolated concerns were raised by your staff during the interviews. These concerns were associated with not having sufficient personnel to accomplish long-term improvements, a loss of trust that management would not subject the staff to negative consequences for raising issues, some confusion about when to place an adverse condition into your corrective action program, and a decrease in confidence that the corrective action program will adequately address problems. (Section 4OA2).

4Q/2006 Inspection Findings - Palo Verde 3 Page 13 of 15 Inspection Report# : 2006008 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity

4Q/2006 Inspection Findings - Palo Verde 3 Page 14 of 15 Emergency Preparedness Significance: N/A Mar 28, 2006 Identified By: NRC Item Type: FIN Finding Emergency Preparedness Assessment The inspectors assessed the licensees evaluation associated with the change to radiological emergency action levels, which decreased the effectiveness of the emergency plan. This performance deficiency was previously characterized as a Severity Level III violation of 10 CFR 50.54(q) in NRC Inspection Report 05000528,529,530/2005011. The inspectors determined that the licensee satisfactorily evaluated the Severity Level-III violation. The licensees evaluation identified two root causes of the performance deficiency: (1) failure to ensure adequate radiation protection expertise review of the emergency action levels changes that were made to Procedure EPIP-99, "Standard Appendices," Revision 2, because of inadequate radiation protection expertise within the emergency planning organization and failure to conduct a required cross-organizational review, and (2) failure of management to address knowledge and ability challenges within the emergency planning organization resulting from attrition of health physics/radiation protection experienced personnel, inadequate training on procedure change requirements, and inadequate management of workload. The inspectors concluded that the licensees evaluation and implemented corrective actions were appropriate to reasonably prevent recurrence of the 10 CFR 50.54(q) violation. Given the licensees acceptable performance in addressing the performance deficiency, the Severity Level III violation is closed. Inspection Report# : 2006008 (pdf) Occupational Radiation Safety Significance: Mar 31, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW RADIATION EXPOSURE PERMIT INSTRUCTIONS The inspector reviewed a self-revealing, noncited violation of Technical Specification 5.4.1.a, resulting from two radiation workers failure to follow radiation exposure permit instructions. On November 22, 2005, two radiation workers, without notifying radiation protection staff, used a pneumatic grinder with a wire wheel inside of the Unit-1 Steam Generator No. 2 cold leg pipe. As a result of the wire wheel grinding, both workers were contaminated. Radiation protection staff members were not made aware of the contamination event until the workers alarmed the PM-7 portal monitor upon attempting egress from the 140-foot radiological controlled area. One worker received unplanned and unintended internal dose of 6 millirem. The other worker did not receive an internal dose. As corrective action, the licensee counseled the two workers and their supervision, and informed the contractors management. The finding was greater than minor because it was associated with one of the cornerstone attributes (exposure control) and the finding affected the occupational radiation safety cornerstone objective, in that a failure to follow radiation exposure permit instructions resulted in additional radiation dose. The inspector determined that the finding had no more than very low safety significance because: (1) it did not involve an ALARA finding, (2) there was no personnel overexposure, (3) there was no substantial potential for personnel overexposure, and (4) the finding did not compromise the licensees ability to assess dose. The finding also had crosscutting aspects related to human performance, in that, radiation workers failed to follow the radiation exposure permit instructions, which directly resulted in the finding. Inspection Report# : 2006002 (pdf)

4Q/2006 Inspection Findings - Palo Verde 3 Page 15 of 15 Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Last modified : March 12, 2007

Palo Verde 3 1Q/2007 Plant Inspection Findings Initiating Events Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation UNINTENTIONAL TRANSFER OF CVCS INVENTORY TO HIGH ACTIVITY SPENT RESIN TANK A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures that resulted in an unintended transfer of water from the chemical volume and control system to the high activity spent resin tank during a resin transfer. Specifically, on September 8, 2006, operations personnel failed to properly implement Procedure 40OP-9CH02, Step 5.3.2, to isolate the purification ion exchanger. Additionally, operations personnel failed to inform the shift manager or control room supervisor prior to starting the evolution as required by Procedure 40OP-9SR02, Step 4.3.8. The improper valve alignment resulted in the diversion of approximately 1500 gallons of water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2923263. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the initiating events cornerstone and did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not effectively utilize human error prevention techniques, such as holding pre-job briefings, self and peer checking, and proper documentation of activities. The improper use of human error prevention techniques caused a diversion of 1500 gallons of water Inspection Report# : 2006004 (pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation EMERGENCY DIESEL TRIP DURING TESTING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of maintenance personnel to follow procedures. Specifically, on April 2, 2006, maintenance personnel failed to follow Procedure 73ST-9DG02, "Class 1E Diesel Generator and Integrated Safeguards Test, Train B," by installing a jumper on the incorrect relay while testing the overcurrent trip. This resulted in an emergency diesel generator trip and de-energization of safety-related Bus PBB-S04. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2880952. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that maintenance personnel did not follow procedures due to self-imposed schedule pressures. Inspection Report# : 2006003 (pdf)

Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTING IN SPENT FUEL POOL DRAIN DOWN AND SPILL IN THE FUEL BUILDING A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, between April 7 and April 12, 2006, operations personnel did not follow Procedure 40OP-9PC06, Fuel Pool Clean Up and Transfer, Revision 37, Appendix AU, resulting in Valve PCN-V119, Cleanup Header Return to the Fuel Canal, being improperly aligned. This resulted in an inadvertent transfer of approximately 1200 gallons of spent fuel pool water to the transfer canal and a spill of contaminated water onto the 120 foot and 100 foot elevations of the fuel building. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2884054. The finding is greater than minor because it is associated with the configuration control and human performance cornerstone attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. This finding cannot be evaluated by the significance determination process because Manual Chapter 0609, "Significance Determination Process," Appendix A, "Significance Determination of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," do not apply to the spent fuel pool. This finding is determined to be of very low safety significance by NRC management review because radiation shielding was provided by the spent fuel pool water level, the spent fuel pool cooling and fuel building ventilation systems were available, and there were multiple sources of makeup water. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures due to poor human error prevention techniques. Inspection Report# : 2006003 (pdf) Significance: Jun 30, 2006 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO FOLLOW GTG SURVEILLANCE PROCEDURE CAUSES LOSS OF POWER TO SAFETY-RELATED BUS A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedure. Specifically, on May 6, 2006, operations personnel failed to achieve a current of approximately zero amperes through Breaker NAN-S03A prior to opening the offsite supply breaker to Bus PBA-S03 as required by Procedure 40OP-9GT01, "Gas Turbine Generator Isochronous Test." This resulted in the loss of power to safety-related Bus PBA-S03 and an actuation of emergency diesel generator Train A. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2891404. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using the Manual Chapter 0609, "Significance Determination Process," Appendix G, "Shutdown Operations Significance Determination Process," Checklist 2, the finding is determined to have very low safety significance because the finding did not result in non-compliance with low temperature over pressure protection Technical Specifications, nor did it degrade the ability of containment to remain intact following an accident. Additionally, the finding did not degrade the licensee's ability to terminate a leak path, add reactor coolant system inventory, recover decay heat removal once it is lost, or establish an alternate core cooling path. Lastly, the finding did not increase the likelihood of a loss of reactor coolant system inventory, decay heat removal, or offsite power. The cause of the finding is related to the crosscutting element of human performance in that poor attention to detail by operations personnel resulted in the loss of power to a safety bus. Inspection Report# : 2006003 (pdf) Mitigating Systems

Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Change to Emergency Diesel Generator Intake Air Oil Bath Filter Standby Oil Level Specification The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to verify or check the adequacy of design for maintaining the emergency diesel generator air intake oil bath filters oil level below the "add oil" mark. Specifically, from approximately November 1994 to January 24, 2007, engineering personnel failed to translate vendor requirements for the Air Maze oil bath air filter oil level into an appropriate operating band. This issue was entered into the corrective action program as Condition Report/Disposition Request 2963525. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to be of very low safety significance because it did not represent an actual loss of system safety function, did not represent an actual loss of a single train for greater than its technical specification allowed outage time, and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. Inspection Report# : 2007002 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify Misalignment of Spring Cans The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of inservice inspection personnel to promptly identify misalignment of spring cans on safety-related piping. Specifically, between April 2005 and May 2006, inservice inspection personnel failed to identify misalignment of spring cans associated with the auxiliary feedwater system and the emergency diesel generators. Section 8.3.5 of Procedure 73TI-9ZZ18 required that the examination of piping systems should be directed to detect any relevant conditions, including misalignment of supports. This issue was entered into the corrective action program as Palo Verde Action Request 2980767. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the failure to identify degraded and non-conforming equipment conditions could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic flooding, or severe weather initiating event. The finding has a crosscutting aspect in the area of problem identification and resolution, associated with corrective action program, since inservice inspection personnel had an inappropriately high threshold for recognizing the misalignment of spring cans on safety-related piping. Inspection Report# : 2007002 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Technical Evaluation of HPSI Pump Bearing Oil Leaks A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with two examples was identified for two inadequate operability evaluations. Prompt operability determinations in CRDRs 2941494 and 2303499 incorrectly concluded that High Pressure Safety Injection Pumps 2A and 3A, respectively, could meet their mission time with existing oil leakage from the bearings. The team concluded that these evaluations relied upon unverified and incorrect assumptions and non-conservative volumes. The apparent cause evaluation for the leakage identified contributing causes that were common to all pumps, but the operability of the other pumps was not assessed. The team identified a history of small oil leaks in high pressure safety injection pumps since 2000, but the licensee was unaware of this trend. Subsequent testing confirmed that five of the six high pressure safety injection pumps had oil leakage which

would not allow running those pumps for the full mission time, but sufficient oil was available to run for at least 94 days. This finding was determined to have cross-cutting aspects in the human performance area of decision-making, because the licensee did not use conservative assumptions and demonstrate that the proposed course of action was safe. Failure to adequately evaluate and correct oil leakage in High Pressure Safety Injection Pumps 2A and 3A, and failure to assess the extent of condition for similar pumps, was a performance deficiency. The finding was more than minor because it affected the equipment performance attribute of the mitigating systems cornerstone objective of ensuring the availability and reliability of a system that responds to initiating events. This finding screened as Green during Phase 1 of the significance determination process because it did not involve a loss of safety function. This issue was entered into the corrective action program under Condition Report/Disposition Report 2973682. Inspection Report# : 2007007 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Preventive Maintenance Change Backlog Was Not Tracking Due Dates A finding was identified for failure to schedule and perform preventive maintenance tasks that were in the preventive maintenance change process. The team identified that a backlog of over 2500 preventive maintenance changes existed which resulted in these preventive maintenance tasks not being scheduled or performed, potentially challenging completion within the specified frequency. The team found 438 examples of preventive maintenance tasks that were overdue, and an additional 2113 that had no due date assigned yet. This program was used to revise both safety-related and non-safety preventive maintenance tasks. Because these preventive maintenance tasks were in the change process, the tasks were not scheduled or tracked in a way that would show when they became overdue. This was contrary to Procedure 30DP-9MP08, Preventive Maintenance Program, Revision 17, which required that no preventive maintenance on operational equipment shall pass that late date without an approved deferral which will address a technical justification for the identified issue. This finding had human performance cross-cutting aspects associated with resources because the large backlog of preventive maintenance tasks was contrary to maintaining long-term equipment reliability. Failure to track, schedule, and perform preventive maintenance activities within their specified frequencies in accordance with their preventive maintenance program was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, it could become a more significant safety concern in that the lack of preventive maintenance would affect the reliability of plant equipment which could impact the initiating events or mitigating systems cornerstones. Because of the large number of preventive maintenance tasks (over 2500) in this category, the team reviewed a sample of 79 tasks associated with safety-related or quality-class components to assess the significance. The team did not identify any examples of overdue safety-related tasks. Based on the lack of risk significant examples and the fact that this finding is not suitable for significance determination process evaluation, this issue was reviewed by NRC management and was determined to be a finding of very low safety significance. This issue was entered into the corrective action program under Palo Verde Action Request 2970076. Inspection Report# : 2007007 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of maintenance and engineering personnel to follow Procedure 30DP-9WP11, "Scaffolding Instructions," Revision 13, and associated engineering specifications governing scaffold erection near safety-related components. Specifically, on September 13, 2006, inspectors identified three scaffolds that were within 2 inches of safety-related components. The scaffolding did not have an engineering evaluation in place, nor were there any documented records of engineering evaluations for any other scaffolding on site. Again on October 3, 2006, the inspectors identified two scaffolds that were directly attached to the fuel and auxiliary building essential air handling units, without the required evaluations. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2924707 and 2929770. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that improperly installed scaffolding could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the

finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse effect to mitigating equipment. This finding has a crosscutting aspect in the area of human performance associated with work control because the licensee did not appropriately coordinate work activities to keep personnel apprised of the operational impact of work activities. Additionally, this finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective actions in that the licensee did not take appropriate corrective actions to address safety issues in a timely manner Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN SEISMIC QUALIFICATION OF POST ACCIDENT MONITORING INSTRUMENTATION The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for post accident monitoring instrumentation by operations personnel. Specifically, prior to November 22, 2006, operations personnel did not maintain the seismic qualification of post accident monitoring instrumentation, by pulling recorders out from the fully inserted position for extended periods. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2945259. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that safety-related equipment that is not maintained in a seismically qualified condition may not be available to perform its safety function under certain accident conditions. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not affect the loss or degradation of equipment specifically designed to mitigate a seismic event, and it did not involve the total loss of any safety function that contributes to external event initiated core damage accident sequences Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN PROCEDURES AND INSTRUCTIONS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions, for the failure to promptly identify and correct a condition adverse to quality. Specifically, since 1992, the licensee failed to maintain procedures and written instructions in accordance with quality assurance program requirements, including, periodic procedural reviews and implementation of the procedure feedback process. These issues resulted in a significant number of deficient procedures and instructions not being corrected in a timely manner and not receiving adequate reviews. One example involved the failure to provide adequate instructions for mounting temperature element housings adversely affecting seismic qualifications required to protect the functionality of safety related equipment. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2952142. This finding is greater than minor because the failure to identify and correct deficient procedures, if left uncorrected, would become a more significant safety concern in that quality related systems, structures, and components could be adversely affected by implementing inadequate instructions. Using the Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not result in loss of operability per, Part 9900, Technical Guidance, Operability Determination Process for Operability and Functional Assessment. This finding involved problem identification and resolution crosscutting aspects associated with the failure to promptly identify and correct deficient procedures/instructions resulting in the potential to adversely affect quality related systems, structures, and components Inspection Report# : 2006005 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS

The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: TBD Nov 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT THE OPERABILITY DETERMINATION PROCESS The team identified two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform operabilty determinations. In both examples, the licensee failed to perform an operability determination following identification of a degraded condition that had the potential to adversely affect the safety function of all emergency diesel generators. Specifically, an operability determination was not performed after identifying the failure of the Unit 3 Train A emergency diesel generator on July 25, 2006, was potentially the result of plastic debris affecting proper auxiliary contact operation of a K-1 relay. The licensee determined the debris most likely originated from a modification performed on all emergency diesel generator K-1 relays during initial plant startup. Following another failure of the Unit 3 Train A emergency diesel generator on September 22, 2006, an operability determination was not performed after identifying the failure was the result of the K-1 relay actuating arm not providing adequate compression of the auxiliary contacts. The licensee determined this degraded condition most likely originated during implementation a modification done to all emergency diesel generator K-1 relays during initial plant startup. This finding is greater than minor because the failure to follow the operability determination process, if left uncorrected, would become a more significant safety concern in that degraded or nonconforming conditions would not be properly evaluated. Using the Phase 1 worksheet in NRC Inspection Manual Chapter 0609, Significance Determination Process, the finding was determined to have very low safety significance because unreliable K-1 relay operation resulted in no actual loss of safety function of the other five emergency diesel generators prior to corrective actions being implemented, and the finding did not represent a potential risk significant condition because of a seismic, flooding, or severe weather event. This issue is documented in the licensees corrective action program as Condition Report/Disposition Requests 2928389 and 2940558. The cause of this finding is related to the crosscutting element of problem identification and resolution in that engineering personnel failed to properly evaluate and perform operability determinations for identified degraded conditions affecting the emergency diesel generators. Inspection Report# : 2006012 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS TO PRECLUDE WATER INTRUSION AND CORROSION OF UNDERGROUND PIPING AT THE FACILITY The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to promptly correct water intrusion problems in multiple areas in the facility, that were identified and examined from January 1991 to April 2006. Specifically, the licensee failed to promptly correct the water

intrusion problems in the facility piping vaults and manholes. This finding also had aspects of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for failing to maintain a vault in its watertight design condition and to coat exposed piping with its specified coating to ensure corrosion protection. This issue was entered into the licensees corrective action program as Condition Report/Disposition Requests 2885972, 2880283, and 2902572. The finding is greater than minor because it is associated with the equipment performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609," Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and there was no actual loss of piping material that exceeded the minimum allowable wall thickness or a loss of safety function that exceeded Technical Specification allowed outage times. This finding has a crosscutting aspect in the area of problem identification and resolution because the licensee failed to thoroughly evaluate a problem that existed from 1992 to April 2006. The failure to promptly correct this condition resulted in the degradation of the wall thickness of the spray pond piping and the Unit 3 emergency diesel generator Train A being declared inoperable after the fuel transfer pump did not meet the acceptance criteria during a surveillance Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation TESTING PERFORMED BEYOND THE SCOPE OF THE FUNCTIONAL RELEASE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow procedures for plant modifications when performing a surveillance test that impacted a component that had been recently modified. Specifically, on April 25, 2006, operations personnel used flow Element 3JSIBFE0348, a modified component that did not have a functional release, to perform surveillance testing of emergency core cooling system check valves. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2887268. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not follow established procedures. The failure to follow procedures resulted in the performance of testing not allowed by a functional release Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY CONDITIONS ADVERSE TO QUALITY FOR THE EMERGENCY DIESEL GENERATORS The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to identify degraded material conditions on the emergency diesel generators. Between July and September 2006, operations and engineering personnel did not promptly identify and correct material conditions adverse to quality. Specifically, operations and engineering personnel did not identify numerous fluid leaks, and loose and missing fasteners on the emergency diesel generator skid, and did not enter them in the corrective action program. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2914886. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that unidentified conditions adverse to quality could challenge the operability of equipment important to safety. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of problem

identification and resolution because failing to implement the corrective action program with a low threshold for identifying adverse material conditions resulted in degradation of the emergency diesel generators which was not being tracked and evaluated Inspection Report# : 2006004 (pdf) Significance: SL-IV Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT COMPLETE REVISIONS TO THE UPDATED FINAL SAFETY ANALYSIS REPORT FOR PERMANENT MODIFICATIONS The inspectors identified a noncited violation of 10 CFR 50.71(e)(4) for the failure to file revisions to the Updated Final Safety Analysis Report. Specifically, Procedure 93DP-0LC03, "Licensing Document Maintenance," Revision 13, Step 3.5.6, required that temporary modifications that are in place for greater than 24 months be incorporated into the Updated Final Safety Analysis Report. Temporary modifications for heated junction thermocouples were installed for greater than 24 months and a revision to the Updated Final Safety Analysis Report was not made. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2894741. The performance deficiency associated with this finding involved the failure of licensee personnel to submit revisions to the Updated Final Safety Analysis Report reflecting temporary modifications installed in Unit 3 for more than 24 months. The finding was determined to be applicable to traditional enforcement because the NRCs ability to perform its regulatory function was potentially impacted by the licensees failure to revise the Updated Final Safety Analysis Report in a timely manner. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. This finding has a crosscutting aspect in the area of human performance associated with work practices because not following established procedures led to an inaccurate Updated Final Safety Analysis Report Inspection Report# : 2006004 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions

prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation TWO EXAMPLES OF FAILURE TO TRANSLATE SPRAY POND DESIGN ASSUMPTIONS INTO PLANT PROCEDURES CONTROL Two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," were identified involving the failure to adequately translate the design basis of the spray ponds into procedures. Design Calculation 13-MC-SP-0307, "SP/EW System Thermal Performance Design Basis Analysis," Revision 7, which demonstrated that the spray pond system could adequately limit spray pond temperature during a design basis accident did not account for any reduced heat capacity caused by sediment buildup. However, this fact was not translated into procedures, so approximately 400 cubic yards of sediment had built up in each of the six spray ponds when the team questioned the impact to the heat removal function. Also, the same calculation demonstrated that sufficient water was available to provide adequate cooling during a design basis accident, but did not account for any leakage from the ponds. The team determined that the licensee did not translate this into a procedure to ensure that the condition of the spray pond was maintained such that leakage did not occur. Procedure 81DP-0ZZ01, "Civil System, Structure, and Component Monitoring Program," Revision 11, was used to monitor the condition of the pond structures. The team identified that it examined only the exposed concrete surfaces, which constituted about 7 percent of the surface area and almost none of the water-containing volume. Cracks had been identified and repaired in this area, but the inspections were not expanded to the underwater surfaces. This issue was documented in Condition Report/Disposition Requests 2906671 and 2910912. Failure to adequately translate the design basis of the spray ponds into procedures was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, the finding could become a more significant safety concern. This finding affected the Mitigating Systems Cornerstone. This performance deficiency screened as having very low safety significance in a Phase 1 significance determination process because the licensee was able to demonstrate that the sediment would not have resulted in a loss of safety function, and that significant leakage did not exist. The licensee was able to revise the calculation to take credit for heat absorption by the concrete walls, and scheduled inspections by divers of underwater portions of the ponds to follow sediment removal Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation MULTIPLE EXAMPLES OF INADEQUATE OPERABILITY ASSESSMENTS FOR HEAT EXCHANGER DEGRADATION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with multiple examples was identified for failure to adequately assess the impact to operability of degraded heat exchangers in the emergency diesel generators and essential cooling water system. Specifically, the licensee failed to follow Procedure 40DP-9OP26, "Operability Determination and Functional Assessment," Revision 16, in assessing indications of degraded heat exchanger performance, an activity affecting quality. Key support organizations were not always involving operations personnel with questions that had a potential to affect the operability of safety-related equipment, or were informing operators only after the support organization had fully evaluated the condition, delaying actions that were required to be prompt. Also, operations personnel did not always insist on a rigorous evaluation. This issue was documented in Condition Report/Disposition Requests 2918892, 2901815, and 2898237. Failure to adequately implement the operability assessment process was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. This finding screened as having very low safety significance in a Phase 1 significance determination process, because the examples used for this violation were confirmed not to involve any loss of safety function. This finding had cross-cutting aspects in the area of human

performance because the licensee did not follow their systematic process for operability decision making when information was not brought to the right decision makers Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE TEST CONTROL TO PROMPTLY IDENTIFY UNACCEPTABLE HEAT EXCHANGER PERFORMANCE TEST RESULTS - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified. Test Procedure 70TI-9EW01, "Thermal Performance Testing of Essential Cooling Water Heat Exchangers," and Procedure 73DP-9ZZ10, "Guidelines for Heat Exchanger Thermal Performance Analysis," were inadequate to ensure the timely determination that the requirements and acceptance limits contained in applicable design documents were met. Specifically, performance testing for Essential Cooling Water Heat Exchanger 2B conducted on March 19, 2002, did not meet the design basis requirements specified in Calculation 13-MC-SP-0307, "SP/EW System Performance Design Bases Analysis," Revision 007, but this was not correctly evaluated to determine whether the system would be capable of performing its design function until August 22, 2002, due to incorrect procedure guidance and lack of requirements to ensure timely evaluation. As a result, this component continued to degrade for 18 months after demonstrating unacceptable performance. This finding had cross cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. Failure to properly control testing and properly identify unacceptable performance was a performance deficiency. This finding was more than minor because it impacted the procedure quality attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has a very low safety significance. This issue was entered into the Corrective Action Program under CRDR 2928230. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-02, Inadequate Test Control to Promptly Identify Unacceptable Performance Test Results. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: SL-IV Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation 10 CFR 50.59 REVIEWS NOT PERFORMED OR INADEQUATE FOR MULTIPLE CHANGES TO SPRAY POND CHEMISTRY CONTROL PROCEDURE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. SL-IV. A noncited violation of 10 CFR 50.59 was identified for making nine revisions to Procedure 74DP-9CY04, "System Chemistry Specification," a procedure described in the Updated Final Safety Analysis Report between 1998 and 2004. Specifically, the licensee failed to perform evaluations for Revisions 3, 6, 8, 10, 12, 24, 28, 32, and 36 and performed inadequate evaluations for Revisions 10 and 36, to assess the potential impact of the changes on the safety-related components in the spray pond system. Each of these changes revised spray pond chemistry parameter limits which were subsequently determined to have contributed to heat exchanger fouling. Failure to adequately evaluate the impact of changes to the Chemistry Control Program was a performance deficiency. Because this violation had the potential to impact the NRCs regulatory function, and because the associated significance was determined to be Green using Phase 3 of the significance determination process, this violation is being treated as a Severity Level IV violation. This issue was entered into the Corrective Action Program under CRDR 2902498. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-03, 50.59 Reviews Not Performed or Inadequate for Multiple Changes to Spray Pond Chemistry Control Procedure. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination.

Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE IDENTIFICATION AND CORRECTIVE ACTION FOR DEGRADED ESSENTIAL COOLING WATER HEAT EXCHANGER PERFORMANCE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," was identified. On March 19, 2002, performance testing for Essential Cooling Water Heat Exchanger 2B indicated that the system would not be capable of performing its design function, but this significant condition adverse to quality was not promptly identified, the cause determined, or corrective actions taken to restore the required heat exchanger performance. Specifically, the unacceptable performance was not promptly identified, because the test results were not correctly calculated until August 22, 2002, which was after operating mode changes and returning the unit to power following the outage. When the test results were finalized, the fact was that the design basis capability was not met, was not recognized or entered into the corrective action program. These failures to correct this degraded performance contributed to the continued degradation and eventual loss of function for a period of 78 days. The failure to correct this degraded performance contributed to the continued degradation and eventual loss of function. This finding had cross cutting aspects associated with the Corrective Action Program, for both inadequate identification of problems and inadequate evaluation of the cause, extent, and impact on operability. Failure to properly assess the impact of scaling on safety-related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, the heat exchangers associated with emergency diesel generators and essential cooling water systems in both trains in all units were allowed to degrade and Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has very low safety significance. This issue was entered into the corrective action program under CRDR 2897810. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-04, Inadequate Corrective Action for Degraded EW Heat Exchanger Performance. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DESIGN CONTROL TO ENSURE NO ESSENTIAL COOLING WATER HEAT EXCHANGER SCALING - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for failure to correctly evaluate the scaling potential of the safety-related heat exchangers cooled by the emergency spray pond during a design basis accident. An error in how the licensee interpreted the SEQUIL calculation caused the licensee to incorrectly conclude that scaling would not occur under the conditions established in the chemistry control program. Failure to properly assess the impact of scaling on safety related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the design control attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, post accident scaling was determined to reduce heat exchanger performance by 2.3 percent of the design capability in the first 24 hours, and up to 4 percent during the design mission time. A Phase 3 significance determination process concluded that this finding has very low safety significance. This finding had cross-cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. This issue was documented in CRDR 2913430. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-05,

Inadequate Design Control to Ensure No EW Heat Exchanger Scaling. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE DEGRADED CONDITIONS TO ENSURE OPERABILITY The inspectors identified two examples of a noncited violation of Technical Specification 5.4.1.a for the failure of engineering personnel to follow procedures. On April 17, 2006, engineering personnel failed to follow Procedure 81DP-0DC13, "Deficiency Work Order," resulting in shutdown cooling Train B being declared operable without fully addressing a potential degraded condition associated with the potential for missing parts from a submersible remaining in plant systems. On May 10, 2006, engineering personnel did not perform evaluations and dispositions required by Procedure 81DP-0DC13 to justify a degraded condition for continued use of a pipe support associated with shutdown cooling line Train A. These issues were entered into the licensee's corrective action program as Condition Report/Disposition Requests 2902258 and 2892737. The finding is greater than minor because it would become a more significant concern if left uncorrected in that Technical Specification required structures, systems, and components (SSCs) may not be operable as required for applicable plant conditions. The performance deficiency associated with this finding was representative of a broader concern related to how the licensee ensures the operability of SSCs required to comply with Technical Specifications. Specifically, the licensee's programs and processes for assessing degraded conditions have not been implemented with the rigor and thoroughness necessary to ensure compliance with regulatory requirements. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that engineering personnel did not follow procedures, resulting in the failure to perform required evaluations and dispositions for deficient conditions. Inspection Report# : 2006003 (pdf) Significance: Jun 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURES RESULTED IN DECLARING BOTH TRAINS OF LOW PRESSURE SAFETY INJECTION INOPERABLE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow Procedure 73ST-9SI03, Leak Test of SI/RCS Pressure Isolation Valves, which resulted in declaring both trains of low pressure safety injection inoperable. Specifically, on May 10, 2006, operations personnel inappropriately allowed safety-injection header pressure to exceed 1850 pisg, which rendered the associated low pressure safety injection pumps inoperable. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 2892697. The finding is greater than minor because it is associated with the human performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not represent an actual loss of safety function. The cause of the finding is related to the crosscutting element of human performance in that operations personnel did not follow procedures and apply the necessary rigor and questioning attitude to requirements and associated decisions because of self-imposed schedule pressures. Inspection Report# : 2006003 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES

The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Emergency Preparedness

Occupational Radiation Safety Public Radiation Safety Physical Protection Physical Protection information not publicly available. Miscellaneous Significance: N/A Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Summary Finding. Biennial PI&R Assessment The team concluded that the thresholds for identifying and classifying issues were appropriately low, although several instances were identified where new aspects to complex problems were identified but not broken out and addressed properly. Numerous changes were made to the corrective action program and some improvement was evident, but some of the changes were not yet fully effective. The new Palo Verde Action Request was introduced, and senior managers were assigned to determine which actions were required in order to improve the consistency of problem treatment. Problems involving operability questions were getting to control room operators more consistently, but NRC inspectors continued to identify operability concerns that were missed by the licensee. However, having the Action Request Review Committee review all problem reports created a bottleneck in the process, creating delays in getting problems from the identification to a working stage. Problems continue to exist in the quality of problem description and significance determination. The timeliness of problem cause evaluations were improving due to management attention, but were still several times longer than station goals and industry standards. Palo Verde Nuclear Generating Station continued to have a large number of latent equipment issues. Numerous longstanding material conditions exist which have received limited assessments and get added to the backlog with routine priority. The NRC continued to identify examples where the significance was underestimated by the licensee and were not being addressed with the timeliness commensurate with the actual safety significance until the NRC gets involved. The team noted that significant challenges have been created because there are large backlogs of work affecting work control, maintenance support, and a variety of engineering activities. These backlogs are affecting the sites ability to address problems in a timely manner. It is apparent that these backlogs have built up over a period of years with the knowledge of management. The Nuclear Assurance Department was active in the internal oversight role and focused on current performance problems, issuing reports that provided useful assessments. Other self-assessments reviewed were frequently narrow in scope and of limited depth. Interviews with site workers indicated that a safety-conscious work environment exists at Palo Verde Nuclear Generating Station, and that workers had an improved confidence in the strength of the safety culture. However, there was less confidence that routine priority issues will get addressed in a timely manner. Inspection Report# : 2007007 (pdf) Last modified : June 01, 2007

Palo Verde 3 2Q/2007 Plant Inspection Findings Initiating Events Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SCOPE CONDENSATE DEMINERALIZER VALVE INTO MAINTENANCE RULE A self-revealing noncited violation of 10 CFR 50.65(b) was identified for the failure of engineering personnel to place some components of the condensate demineralizer system into the scope of its program for monitoring the effectiveness of maintenance. Specifically, on October 19, 2006, Unit 3 reactor was manually tripped when condenser vacuum was degraded due to the failure of condensate demineralizer vessel waste drain Valve 3JSCNUV0232. Prior operating experience at Palo Verde demonstrated that the failure of Valve 3JSCNUV0232 could result in a reactor trip. However, the licensee did not appropriately scope Valve 3JSCNUV0232 into its program for monitoring the effectiveness of maintenance. This issue was entered into the corrective action program as Condition Report/Disposition Request 3035444. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it does not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. Inspection Report# : 2007003 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO APPLY INDUSTRY OPERATING EXPERIENCE TO MAINTENANCE ACTIVITIES RESULTS IN A PLANT TRANSIENT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," for the failure of inservice inspection personnel to promptly identify and correct a condition adverse to quality. Specifically, since April 19, 2006, floor-welded spray pond pipe Supports 13-SP-030-H-007 and 13-SP-030-H-008 in the essential pipe density tunnel became degraded at the weld due to long term standing water in the tunnel. The licensee thought these supports had been previously identified and placed in the corrective action program, but that was not the case. This issue was entered into the corrective action program as Palo Verde Action Request 2989960. The finding is greater than minor because if left uncorrected the degradation would have led to a more significant safety concern. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. The cause of the finding is also related to the crosscutting aspect of problem identification and resolution with a corrective action program causal factor because the threshold for identifying issues was not sufficiently low and the degraded supports were not identified completely, accurately, and in a timely manner commensurate with their safety significance (P.1. (a)). Inspection Report# : 2007003 (pdf) Significance: Nov 03, 2006

Identified By: NRC Item Type: NCV NonCited Violation UNINTENTIONAL TRANSFER OF CVCS INVENTORY TO HIGH ACTIVITY SPENT RESIN TANK A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures that resulted in an unintended transfer of water from the chemical volume and control system to the high activity spent resin tank during a resin transfer. Specifically, on September 8, 2006, operations personnel failed to properly implement Procedure 40OP-9CH02, Step 5.3.2, to isolate the purification ion exchanger. Additionally, operations personnel failed to inform the shift manager or control room supervisor prior to starting the evolution as required by Procedure 40OP-9SR02, Step 4.3.8. The improper valve alignment resulted in the diversion of approximately 1500 gallons of water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2923263. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the initiating events cornerstone and did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not effectively utilize human error prevention techniques, such as holding pre-job briefings, self and peer checking, and proper documentation of activities. The improper use of human error prevention techniques caused a diversion of 1500 gallons of water Inspection Report# : 2006004 (pdf) Mitigating Systems Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADED STRUCTURAL SUPPORTS A self-revealing noncited violation of 10 CFR 50.65(a)(3) was identified for failure of the licensee to incorporate internal and external industry operating experience into preventative maintenance activities that could have prevented a maintenance rule functional failure of feedwater pump Turbine A, a high risk heat removal system. Specifically, prior to March 18, 2007, the licensee did not incorporate available operating experience into preventative maintenance instructions to inspect, clean, and verify acceptable equipment condition for the linear variable differential transmitter linkage assembly. Failure to inspect and clean the linear variable differential transmitter linkage assembly resulted in a broken linkage, due to binding, causing erratic cycling of the feedwater pump turbine control valves resulting in a manual trip of feedwater Pump A and reactor power cutback to 48 percent power. This issue was entered into the corrective action program as Condition Report/Disposition Request 2984713. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in exceeding the Technical Specification limit for identified reactor coolant system leakage and did not affect other mitigation systems; the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and the finding did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of problem identification and resolution, associated with operating experience, since engineering personnel failed to account for prior operating experience in determining the maintenance rule scope and appropriate preventive maintenance for Valve 3JSCNUV0232 (P.2(b)). Inspection Report# : 2007003 (pdf)

Significance: May 25, 2007 Identified By: NRC Item Type: FIN Finding Ineffective Demonstration of Conformance to Design for the Alternate ac Power Sources The team identified a finding involving the implementation of Regulatory Guide 1.155, Station Blackout, Appendix A, for the demonstration of the station backout generator design and system readiness requirements. Specifically, established preventive maintenance tasks did not demonstrate that the coping requirements for the station blackout generator would be met for the approved increase from the 4-hour to 16-hour coping duration that, at the time this finding was identified, would become effective the following month. The licensee has entered this finding into their corrective action program as Palo Verde Action Request PVAR 2982699. The finding is greater than minor because it would become a more significant safety concern if left uncorrected following the implementation of the 16-hour coping duration. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to adequately evaluate the design and system readiness requirements for the station blackout generators for the approved license amendment that, at the time the finding was identified, would, increase the coping period to 16-hours. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Control of Design Information for the Station Blackout System The team identified a noncited violation of very low safety significance for the failure to implement the design control requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 1, Design Control and Procurement Control, to 10 CFR 50.63, Loss of All Alternating Current. Specifically, approved Design Change DMWO 2827452 did not account for key station blackout generator performance parameters that included fuel and lubricating oil consumption rates and required station blackout battery capacity for an increase in the station blackout coping period from 4 to16-hours. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the critical performance parameters for ensuring the station blackout generators would meet the 16-hour coping requirement were not established. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to evaluate the key performance parameters for the station blackout generators for the approved license amendment that increased the coping period to 16-hours. (Section 1R21b.2.) Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Non-conservative Containment Sump Level Analysis The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Appendix B, Criterion III, Design Control. Specifically, the design calculation that determined the minimum containment flood level following a loss-of-coolant accident was not based on the most limiting reactor coolant system break location. The calculated containment flood level was used to verify the adequacy of the available net positive suction head for the emergency core cooling pumps that would take suction from the containment sump during the recirculation phase of a postulated

loss-of-coolant accident. The licensee has entered this issue into their corrective action program as Palo Verde Action Request PVAR 2981257. This finding is greater than minor because this issue required accident analysis calculations to be re-performed to assure the accident requirements were met. The finding affected the mitigating systems cornerstone as related to the availability, reliability, and capability of the emergency core cooling system for post-loss-of-cooling accident. In accordance with Inspection Manual Chapter 0609, Significance Determination Process, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations, the team conducted a Phase 1 screening and determined the finding was of very low safety significance because it did not represent an actual loss of safety function. This deficiency would not have resulted in the emergency core cooling pumps becoming inoperable under the most limiting postulated accident conditions. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Maintenance on Target Rock Solenoid-Operated Valves The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Criterion XVI, Corrective Actions, for the failure to identify and correct significant conditions adverse to quality involving Target Rock valve failures. The licensee has entered this issue into their corrective action program as Palo Verde Nuclear Generating Station Action Requests PVAR 2984832 and 2985372. The failure to identify and correct the cause(s) of turbine-driven auxiliary feedwater pump Target Rock solenoid-operated valves was a performance deficiency. This issue is more than minor because it is associated separately with the mitigating systems cornerstone and on one occasion affected the containment barrier integrity cornerstone. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Change to Emergency Diesel Generator Intake Air Oil Bath Filter Standby Oil Level Specification The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to verify or check the adequacy of design for maintaining the emergency diesel generator air intake oil bath filters oil level below the "add oil" mark. Specifically, from approximately November 1994 to January 24, 2007, engineering personnel failed to translate vendor requirements for the Air Maze oil bath air filter oil level into an appropriate operating band. This issue was entered into the corrective action program as Condition Report/Disposition Request 2963525. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to be of very low safety significance because it did not represent an actual loss of system safety function, did not represent an actual loss of a single train for greater than its technical specification allowed outage time, and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. Inspection Report# : 2007002 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation

Failure to Identify Misalignment of Spring Cans The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of inservice inspection personnel to promptly identify misalignment of spring cans on safety-related piping. Specifically, between April 2005 and May 2006, inservice inspection personnel failed to identify misalignment of spring cans associated with the auxiliary feedwater system and the emergency diesel generators. Section 8.3.5 of Procedure 73TI-9ZZ18 required that the examination of piping systems should be directed to detect any relevant conditions, including misalignment of supports. This issue was entered into the corrective action program as Palo Verde Action Request 2980767. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the failure to identify degraded and non-conforming equipment conditions could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic flooding, or severe weather initiating event. The finding has a crosscutting aspect in the area of problem identification and resolution, associated with corrective action program, since inservice inspection personnel had an inappropriately high threshold for recognizing the misalignment of spring cans on safety-related piping. Inspection Report# : 2007002 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Technical Evaluation of HPSI Pump Bearing Oil Leaks A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with two examples was identified for two inadequate operability evaluations. Prompt operability determinations in CRDRs 2941494 and 2303499 incorrectly concluded that High Pressure Safety Injection Pumps 2A and 3A, respectively, could meet their mission time with existing oil leakage from the bearings. The team concluded that these evaluations relied upon unverified and incorrect assumptions and non-conservative volumes. The apparent cause evaluation for the leakage identified contributing causes that were common to all pumps, but the operability of the other pumps was not assessed. The team identified a history of small oil leaks in high pressure safety injection pumps since 2000, but the licensee was unaware of this trend. Subsequent testing confirmed that five of the six high pressure safety injection pumps had oil leakage which would not allow running those pumps for the full mission time, but sufficient oil was available to run for at least 94 days. This finding was determined to have cross-cutting aspects in the human performance area of decision-making, because the licensee did not use conservative assumptions and demonstrate that the proposed course of action was safe. Failure to adequately evaluate and correct oil leakage in High Pressure Safety Injection Pumps 2A and 3A, and failure to assess the extent of condition for similar pumps, was a performance deficiency. The finding was more than minor because it affected the equipment performance attribute of the mitigating systems cornerstone objective of ensuring the availability and reliability of a system that responds to initiating events. This finding screened as Green during Phase 1 of the significance determination process because it did not involve a loss of safety function. This issue was entered into the corrective action program under Condition Report/Disposition Report 2973682. Inspection Report# : 2007007 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Preventive Maintenance Change Backlog Was Not Tracking Due Dates A finding was identified for failure to schedule and perform preventive maintenance tasks that were in the preventive maintenance change process. The team identified that a backlog of over 2500 preventive maintenance changes existed which resulted in these preventive maintenance tasks not being scheduled or performed, potentially challenging completion within the specified frequency. The team found 438 examples of preventive maintenance tasks that were overdue, and an additional 2113 that had no due date assigned yet. This program was used to revise both safety-related and non-safety preventive maintenance tasks. Because these preventive maintenance tasks were in the change process, the tasks were not scheduled or tracked in a way that would show when they became overdue. This was

contrary to Procedure 30DP-9MP08, Preventive Maintenance Program, Revision 17, which required that no preventive maintenance on operational equipment shall pass that late date without an approved deferral which will address a technical justification for the identified issue. This finding had human performance cross-cutting aspects associated with resources because the large backlog of preventive maintenance tasks was contrary to maintaining long-term equipment reliability. Failure to track, schedule, and perform preventive maintenance activities within their specified frequencies in accordance with their preventive maintenance program was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, it could become a more significant safety concern in that the lack of preventive maintenance would affect the reliability of plant equipment which could impact the initiating events or mitigating systems cornerstones. Because of the large number of preventive maintenance tasks (over 2500) in this category, the team reviewed a sample of 79 tasks associated with safety-related or quality-class components to assess the significance. The team did not identify any examples of overdue safety-related tasks. Based on the lack of risk significant examples and the fact that this finding is not suitable for significance determination process evaluation, this issue was reviewed by NRC management and was determined to be a finding of very low safety significance. This issue was entered into the corrective action program under Palo Verde Action Request 2970076. Inspection Report# : 2007007 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of maintenance and engineering personnel to follow Procedure 30DP-9WP11, "Scaffolding Instructions," Revision 13, and associated engineering specifications governing scaffold erection near safety-related components. Specifically, on September 13, 2006, inspectors identified three scaffolds that were within 2 inches of safety-related components. The scaffolding did not have an engineering evaluation in place, nor were there any documented records of engineering evaluations for any other scaffolding on site. Again on October 3, 2006, the inspectors identified two scaffolds that were directly attached to the fuel and auxiliary building essential air handling units, without the required evaluations. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2924707 and 2929770. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that improperly installed scaffolding could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse effect to mitigating equipment. This finding has a crosscutting aspect in the area of human performance associated with work control because the licensee did not appropriately coordinate work activities to keep personnel apprised of the operational impact of work activities. Additionally, this finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective actions in that the licensee did not take appropriate corrective actions to address safety issues in a timely manner Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN SEISMIC QUALIFICATION OF POST ACCIDENT MONITORING INSTRUMENTATION The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for post accident monitoring instrumentation by operations personnel. Specifically, prior to November 22, 2006, operations personnel did not maintain the seismic qualification of post accident monitoring instrumentation, by pulling recorders out from the fully inserted position for extended periods. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2945259.

The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that safety-related equipment that is not maintained in a seismically qualified condition may not be available to perform its safety function under certain accident conditions. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not affect the loss or degradation of equipment specifically designed to mitigate a seismic event, and it did not involve the total loss of any safety function that contributes to external event initiated core damage accident sequences Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN PROCEDURES AND INSTRUCTIONS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions, for the failure to promptly identify and correct a condition adverse to quality. Specifically, since 1992, the licensee failed to maintain procedures and written instructions in accordance with quality assurance program requirements, including, periodic procedural reviews and implementation of the procedure feedback process. These issues resulted in a significant number of deficient procedures and instructions not being corrected in a timely manner and not receiving adequate reviews. One example involved the failure to provide adequate instructions for mounting temperature element housings adversely affecting seismic qualifications required to protect the functionality of safety related equipment. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2952142. This finding is greater than minor because the failure to identify and correct deficient procedures, if left uncorrected, would become a more significant safety concern in that quality related systems, structures, and components could be adversely affected by implementing inadequate instructions. Using the Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not result in loss of operability per, Part 9900, Technical Guidance, Operability Determination Process for Operability and Functional Assessment. This finding involved problem identification and resolution crosscutting aspects associated with the failure to promptly identify and correct deficient procedures/instructions resulting in the potential to adversely affect quality related systems, structures, and components Inspection Report# : 2006005 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be

inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT THE OPERABILITY DETERMINATION PROCESS The team identified two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform operabilty determinations. In both examples, the licensee failed to perform an operability determination following identification of a degraded condition that had the potential to adversely affect the safety function of all emergency diesel generators. Specifically, an operability determination was not performed after identifying the failure of the Unit 3 Train A emergency diesel generator on July 25, 2006, was potentially the result of plastic debris affecting proper auxiliary contact operation of a K-1 relay. The licensee determined the debris most likely originated from a modification performed on all emergency diesel generator K-1 relays during initial plant startup. Following another failure of the Unit 3 Train A emergency diesel generator on September 22, 2006, an operability determination was not performed after identifying the failure was the result of the K-1 relay actuating arm not providing adequate compression of the auxiliary contacts. The licensee determined this degraded condition most likely originated during implementation a modification done to all emergency diesel generator K-1 relays during initial plant startup. This finding is greater than minor because the failure to follow the operability determination process, if left uncorrected, would become a more significant safety concern in that degraded or nonconforming conditions would not be properly evaluated. Using the Phase 1 worksheet in NRC Inspection Manual Chapter 0609, Significance Determination Process, the finding was determined to have very low safety significance because unreliable K-1 relay operation resulted in no actual loss of safety function of the other five emergency diesel generators prior to corrective actions being implemented, and the finding did not represent a potential risk significant condition because of a seismic, flooding, or severe weather event. This issue is documented in the licensees corrective action program as Condition Report/Disposition Requests 2928389 and 2940558. The cause of this finding is related to the crosscutting element of problem identification and resolution in that engineering personnel failed to properly evaluate and perform operability determinations for identified degraded conditions affecting the emergency diesel generators. Inspection Report# : 2006012 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS TO PRECLUDE WATER INTRUSION AND CORROSION OF UNDERGROUND PIPING AT THE FACILITY The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to promptly correct water intrusion problems in multiple areas in the facility, that were identified and examined from January 1991 to April 2006. Specifically, the licensee failed to promptly correct the water intrusion problems in the facility piping vaults and manholes. This finding also had aspects of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for failing to maintain a vault in its watertight design condition and to coat exposed piping with its specified coating to ensure corrosion protection. This issue was entered into the licensees corrective action program as Condition Report/Disposition Requests 2885972, 2880283, and 2902572. The finding is greater than minor because it is associated with the equipment performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609," Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and there was no actual loss of piping material that exceeded the minimum allowable wall thickness or a loss of safety function that exceeded Technical Specification allowed outage times. This finding has a crosscutting aspect in the area of problem identification and resolution because the licensee failed to thoroughly evaluate a problem that existed from 1992 to April 2006. The failure to promptly correct this condition resulted in the degradation of the wall thickness of the spray pond piping and the Unit 3 emergency diesel generator Train A being declared inoperable after the fuel transfer pump did not meet the acceptance criteria during a surveillance

Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation TESTING PERFORMED BEYOND THE SCOPE OF THE FUNCTIONAL RELEASE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow procedures for plant modifications when performing a surveillance test that impacted a component that had been recently modified. Specifically, on April 25, 2006, operations personnel used flow Element 3JSIBFE0348, a modified component that did not have a functional release, to perform surveillance testing of emergency core cooling system check valves. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2887268. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not follow established procedures. The failure to follow procedures resulted in the performance of testing not allowed by a functional release Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY CONDITIONS ADVERSE TO QUALITY FOR THE EMERGENCY DIESEL GENERATORS The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to identify degraded material conditions on the emergency diesel generators. Between July and September 2006, operations and engineering personnel did not promptly identify and correct material conditions adverse to quality. Specifically, operations and engineering personnel did not identify numerous fluid leaks, and loose and missing fasteners on the emergency diesel generator skid, and did not enter them in the corrective action program. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2914886. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that unidentified conditions adverse to quality could challenge the operability of equipment important to safety. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of problem identification and resolution because failing to implement the corrective action program with a low threshold for identifying adverse material conditions resulted in degradation of the emergency diesel generators which was not being tracked and evaluated Inspection Report# : 2006004 (pdf) Significance: SL-IV Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT COMPLETE REVISIONS TO THE UPDATED FINAL SAFETY ANALYSIS REPORT FOR PERMANENT MODIFICATIONS The inspectors identified a noncited violation of 10 CFR 50.71(e)(4) for the failure to file revisions to the Updated Final Safety Analysis Report. Specifically, Procedure 93DP-0LC03, "Licensing Document Maintenance," Revision 13, Step 3.5.6, required that temporary modifications that are in place for greater than 24 months be incorporated into the Updated Final Safety Analysis Report. Temporary modifications for heated junction thermocouples were installed for greater than 24 months and a revision to the Updated Final Safety Analysis Report was not made. This issue was

entered into the licensee's corrective action program as Condition Report/Disposition Request 2894741. The performance deficiency associated with this finding involved the failure of licensee personnel to submit revisions to the Updated Final Safety Analysis Report reflecting temporary modifications installed in Unit 3 for more than 24 months. The finding was determined to be applicable to traditional enforcement because the NRCs ability to perform its regulatory function was potentially impacted by the licensees failure to revise the Updated Final Safety Analysis Report in a timely manner. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. This finding has a crosscutting aspect in the area of human performance associated with work practices because not following established procedures led to an inaccurate Updated Final Safety Analysis Report Inspection Report# : 2006004 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation TWO EXAMPLES OF FAILURE TO TRANSLATE SPRAY POND DESIGN ASSUMPTIONS INTO PLANT PROCEDURES CONTROL Two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," were identified involving the failure to adequately translate the design basis of the spray ponds into procedures. Design Calculation

13-MC-SP-0307, "SP/EW System Thermal Performance Design Basis Analysis," Revision 7, which demonstrated that the spray pond system could adequately limit spray pond temperature during a design basis accident did not account for any reduced heat capacity caused by sediment buildup. However, this fact was not translated into procedures, so approximately 400 cubic yards of sediment had built up in each of the six spray ponds when the team questioned the impact to the heat removal function. Also, the same calculation demonstrated that sufficient water was available to provide adequate cooling during a design basis accident, but did not account for any leakage from the ponds. The team determined that the licensee did not translate this into a procedure to ensure that the condition of the spray pond was maintained such that leakage did not occur. Procedure 81DP-0ZZ01, "Civil System, Structure, and Component Monitoring Program," Revision 11, was used to monitor the condition of the pond structures. The team identified that it examined only the exposed concrete surfaces, which constituted about 7 percent of the surface area and almost none of the water-containing volume. Cracks had been identified and repaired in this area, but the inspections were not expanded to the underwater surfaces. This issue was documented in Condition Report/Disposition Requests 2906671 and 2910912. Failure to adequately translate the design basis of the spray ponds into procedures was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, the finding could become a more significant safety concern. This finding affected the Mitigating Systems Cornerstone. This performance deficiency screened as having very low safety significance in a Phase 1 significance determination process because the licensee was able to demonstrate that the sediment would not have resulted in a loss of safety function, and that significant leakage did not exist. The licensee was able to revise the calculation to take credit for heat absorption by the concrete walls, and scheduled inspections by divers of underwater portions of the ponds to follow sediment removal Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation MULTIPLE EXAMPLES OF INADEQUATE OPERABILITY ASSESSMENTS FOR HEAT EXCHANGER DEGRADATION A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with multiple examples was identified for failure to adequately assess the impact to operability of degraded heat exchangers in the emergency diesel generators and essential cooling water system. Specifically, the licensee failed to follow Procedure 40DP-9OP26, "Operability Determination and Functional Assessment," Revision 16, in assessing indications of degraded heat exchanger performance, an activity affecting quality. Key support organizations were not always involving operations personnel with questions that had a potential to affect the operability of safety-related equipment, or were informing operators only after the support organization had fully evaluated the condition, delaying actions that were required to be prompt. Also, operations personnel did not always insist on a rigorous evaluation. This issue was documented in Condition Report/Disposition Requests 2918892, 2901815, and 2898237. Failure to adequately implement the operability assessment process was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. This finding screened as having very low safety significance in a Phase 1 significance determination process, because the examples used for this violation were confirmed not to involve any loss of safety function. This finding had cross-cutting aspects in the area of human performance because the licensee did not follow their systematic process for operability decision making when information was not brought to the right decision makers Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE TEST CONTROL TO PROMPTLY IDENTIFY UNACCEPTABLE HEAT EXCHANGER PERFORMANCE TEST RESULTS - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XI, "Test Control," was identified. Test Procedure 70TI-9EW01, "Thermal Performance Testing of Essential Cooling Water Heat Exchangers," and Procedure 73DP-9ZZ10, "Guidelines for Heat Exchanger Thermal Performance Analysis," were inadequate to ensure the timely

determination that the requirements and acceptance limits contained in applicable design documents were met. Specifically, performance testing for Essential Cooling Water Heat Exchanger 2B conducted on March 19, 2002, did not meet the design basis requirements specified in Calculation 13-MC-SP-0307, "SP/EW System Performance Design Bases Analysis," Revision 007, but this was not correctly evaluated to determine whether the system would be capable of performing its design function until August 22, 2002, due to incorrect procedure guidance and lack of requirements to ensure timely evaluation. As a result, this component continued to degrade for 18 months after demonstrating unacceptable performance. This finding had cross cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. Failure to properly control testing and properly identify unacceptable performance was a performance deficiency. This finding was more than minor because it impacted the procedure quality attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has a very low safety significance. This issue was entered into the Corrective Action Program under CRDR 2928230. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-02, Inadequate Test Control to Promptly Identify Unacceptable Performance Test Results. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: SL-IV Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation 10 CFR 50.59 REVIEWS NOT PERFORMED OR INADEQUATE FOR MULTIPLE CHANGES TO SPRAY POND CHEMISTRY CONTROL PROCEDURE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. SL-IV. A noncited violation of 10 CFR 50.59 was identified for making nine revisions to Procedure 74DP-9CY04, "System Chemistry Specification," a procedure described in the Updated Final Safety Analysis Report between 1998 and 2004. Specifically, the licensee failed to perform evaluations for Revisions 3, 6, 8, 10, 12, 24, 28, 32, and 36 and performed inadequate evaluations for Revisions 10 and 36, to assess the potential impact of the changes on the safety-related components in the spray pond system. Each of these changes revised spray pond chemistry parameter limits which were subsequently determined to have contributed to heat exchanger fouling. Failure to adequately evaluate the impact of changes to the Chemistry Control Program was a performance deficiency. Because this violation had the potential to impact the NRCs regulatory function, and because the associated significance was determined to be Green using Phase 3 of the significance determination process, this violation is being treated as a Severity Level IV violation. This issue was entered into the Corrective Action Program under CRDR 2902498. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-03, 50.59 Reviews Not Performed or Inadequate for Multiple Changes to Spray Pond Chemistry Control Procedure. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE IDENTIFICATION AND CORRECTIVE ACTION FOR DEGRADED ESSENTIAL COOLING WATER HEAT EXCHANGER PERFORMANCE - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," was identified. On March 19, 2002, performance testing for Essential Cooling Water Heat Exchanger 2B indicated that the system would not be capable of performing its design function, but this significant condition adverse to quality was not promptly identified, the cause determined, or corrective actions taken to restore the required heat exchanger performance.

Specifically, the unacceptable performance was not promptly identified, because the test results were not correctly calculated until August 22, 2002, which was after operating mode changes and returning the unit to power following the outage. When the test results were finalized, the fact was that the design basis capability was not met, was not recognized or entered into the corrective action program. These failures to correct this degraded performance contributed to the continued degradation and eventual loss of function for a period of 78 days. The failure to correct this degraded performance contributed to the continued degradation and eventual loss of function. This finding had cross cutting aspects associated with the Corrective Action Program, for both inadequate identification of problems and inadequate evaluation of the cause, extent, and impact on operability. Failure to properly assess the impact of scaling on safety-related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the equipment performance attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, the heat exchangers associated with emergency diesel generators and essential cooling water systems in both trains in all units were allowed to degrade and Essential Cooling Water Train B in Unit 2 was estimated to have been incapable of performing its function under existing conditions for approximately 78 days. A Phase 3 significance determination process concluded that this finding has very low safety significance. This issue was entered into the corrective action program under CRDR 2897810. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-04, Inadequate Corrective Action for Degraded EW Heat Exchanger Performance. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Sep 26, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE DESIGN CONTROL TO ENSURE NO ESSENTIAL COOLING WATER HEAT EXCHANGER SCALING - RECHARACTERIZED IN FINAL SIGNIFICANCE DETERMINATION LETTER TO BE A GREEN NCV. Green. A noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," was identified for failure to correctly evaluate the scaling potential of the safety-related heat exchangers cooled by the emergency spray pond during a design basis accident. An error in how the licensee interpreted the SEQUIL calculation caused the licensee to incorrectly conclude that scaling would not occur under the conditions established in the chemistry control program. Failure to properly assess the impact of scaling on safety related heat exchangers cooled by the spray pond system was a performance deficiency. This finding was more than minor because it impacted the design control attribute of the Mitigating Systems Cornerstone objective to maintain the availability and reliability of systems needed to mitigate accidents. Specifically, post accident scaling was determined to reduce heat exchanger performance by 2.3 percent of the design capability in the first 24 hours, and up to 4 percent during the design mission time. A Phase 3 significance determination process concluded that this finding has very low safety significance. This finding had cross-cutting aspects in the area of Human Performance, under the Resource attribute, because the licensee failed to ensure that adequate procedures were available to ensure nuclear safety. This issue was documented in CRDR 2913430. Because this violation was of very low safety significance and has been entered into the corrective action program, it is being treated as a noncited violation consistent with Section VI.A of the Enforcement Policy: NCV 05000528; 05000529; 05000530/2006011-05, Inadequate Design Control to Ensure No EW Heat Exchanger Scaling. This issue was re-characterized from an AV to an NCV as a result of the Regulatory Conference conducted on November 20, 2006 and the final significance determination. Inspection Report# : 2006011 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control

room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety

Public Radiation Safety Significance: Feb 22, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to control the release of radioactive material A self-revealing, noncited violation of Technical Specification 5.4.1 was reviewed regarding the failure to control the release of radioactive material. On February 2, 2006, the licensee was notified by another site that equipment received was labeled as radioactive material. Specifically, five items, with a maximum activity of 280 counts per minute, were inappropriately released from the radiologically controlled area and subsequently the protected area. The licensee's corrective actions include evaluating and implementing changes to the material release program and processes. The finding is greater than minor because it was associated with the Public Radiation Safety cornerstone attribute of human performance and affected the associated cornerstone objective to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain as a result of routine civilian nuclear reactor operation. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. In addition, this finding had a human performance cross-cutting aspect associated with work practices because the licensee failed to ensure supervisory and management oversight of work activities, including contractors Inspection Report# : 2007010 (pdf) Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Summary Finding. Biennial PI&R Assessment The team concluded that the thresholds for identifying and classifying issues were appropriately low, although several instances were identified where new aspects to complex problems were identified but not broken out and addressed properly. Numerous changes were made to the corrective action program and some improvement was evident, but some of the changes were not yet fully effective. The new Palo Verde Action Request was introduced, and senior managers were assigned to determine which actions were required in order to improve the consistency of problem treatment. Problems involving operability questions were getting to control room operators more consistently, but NRC inspectors continued to identify operability concerns that were missed by the licensee. However, having the Action Request Review Committee review all problem reports created a bottleneck in the process, creating delays in getting problems from the identification to a working stage. Problems continue to exist in the quality of problem description and significance determination. The timeliness of problem cause evaluations were improving due to management attention, but were still several times longer than station goals and industry standards. Palo Verde Nuclear Generating Station continued to have a large number of latent equipment issues. Numerous longstanding material conditions exist which have received limited assessments and get added to the backlog with

routine priority. The NRC continued to identify examples where the significance was underestimated by the licensee and were not being addressed with the timeliness commensurate with the actual safety significance until the NRC gets involved. The team noted that significant challenges have been created because there are large backlogs of work affecting work control, maintenance support, and a variety of engineering activities. These backlogs are affecting the sites ability to address problems in a timely manner. It is apparent that these backlogs have built up over a period of years with the knowledge of management. The Nuclear Assurance Department was active in the internal oversight role and focused on current performance problems, issuing reports that provided useful assessments. Other self-assessments reviewed were frequently narrow in scope and of limited depth. Interviews with site workers indicated that a safety-conscious work environment exists at Palo Verde Nuclear Generating Station, and that workers had an improved confidence in the strength of the safety culture. However, there was less confidence that routine priority issues will get addressed in a timely manner. Inspection Report# : 2007007 (pdf) Last modified : August 24, 2007

Palo Verde 3 3Q/2007 Plant Inspection Findings Initiating Events Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SCOPE CONDENSATE DEMINERALIZER VALVE INTO MAINTENANCE RULE A self-revealing noncited violation of 10 CFR 50.65(b) was identified for the failure of engineering personnel to place some components of the condensate demineralizer system into the scope of its program for monitoring the effectiveness of maintenance. Specifically, on October 19, 2006, Unit 3 reactor was manually tripped when condenser vacuum was degraded due to the failure of condensate demineralizer vessel waste drain Valve 3JSCNUV0232. Prior operating experience at Palo Verde demonstrated that the failure of Valve 3JSCNUV0232 could result in a reactor trip. However, the licensee did not appropriately scope Valve 3JSCNUV0232 into its program for monitoring the effectiveness of maintenance. This issue was entered into the corrective action program as Condition Report/Disposition Request 3035444. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it does not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. Inspection Report# : 2007003 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO APPLY INDUSTRY OPERATING EXPERIENCE TO MAINTENANCE ACTIVITIES RESULTS IN A PLANT TRANSIENT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," for the failure of inservice inspection personnel to promptly identify and correct a condition adverse to quality. Specifically, since April 19, 2006, floor-welded spray pond pipe Supports 13-SP-030-H-007 and 13-SP-030-H-008 in the essential pipe density tunnel became degraded at the weld due to long term standing water in the tunnel. The licensee thought these supports had been previously identified and placed in the corrective action program, but that was not the case. This issue was entered into the corrective action program as Palo Verde Action Request 2989960. The finding is greater than minor because if left uncorrected the degradation would have led to a more significant safety concern. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. The cause of the finding is also related to the crosscutting aspect of problem identification and resolution with a corrective action program causal factor because the threshold for identifying issues was not sufficiently low and the degraded supports were not identified completely, accurately, and in a timely manner commensurate with their safety significance (P.1. (a)). Inspection Report# : 2007003 (pdf) Significance: Nov 03, 2006

Identified By: NRC Item Type: NCV NonCited Violation UNINTENTIONAL TRANSFER OF CVCS INVENTORY TO HIGH ACTIVITY SPENT RESIN TANK A self-revealing noncited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures that resulted in an unintended transfer of water from the chemical volume and control system to the high activity spent resin tank during a resin transfer. Specifically, on September 8, 2006, operations personnel failed to properly implement Procedure 40OP-9CH02, Step 5.3.2, to isolate the purification ion exchanger. Additionally, operations personnel failed to inform the shift manager or control room supervisor prior to starting the evolution as required by Procedure 40OP-9SR02, Step 4.3.8. The improper valve alignment resulted in the diversion of approximately 1500 gallons of water. The issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2923263. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the initiating events cornerstone and affects the associated cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the initiating events cornerstone and did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not effectively utilize human error prevention techniques, such as holding pre-job briefings, self and peer checking, and proper documentation of activities. The improper use of human error prevention techniques caused a diversion of 1500 gallons of water Inspection Report# : 2006004 (pdf) Mitigating Systems Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADED STRUCTURAL SUPPORTS A self-revealing noncited violation of 10 CFR 50.65(a)(3) was identified for failure of the licensee to incorporate internal and external industry operating experience into preventative maintenance activities that could have prevented a maintenance rule functional failure of feedwater pump Turbine A, a high risk heat removal system. Specifically, prior to March 18, 2007, the licensee did not incorporate available operating experience into preventative maintenance instructions to inspect, clean, and verify acceptable equipment condition for the linear variable differential transmitter linkage assembly. Failure to inspect and clean the linear variable differential transmitter linkage assembly resulted in a broken linkage, due to binding, causing erratic cycling of the feedwater pump turbine control valves resulting in a manual trip of feedwater Pump A and reactor power cutback to 48 percent power. This issue was entered into the corrective action program as Condition Report/Disposition Request 2984713. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in exceeding the Technical Specification limit for identified reactor coolant system leakage and did not affect other mitigation systems; the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and the finding did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of problem identification and resolution, associated with operating experience, since engineering personnel failed to account for prior operating experience in determining the maintenance rule scope and appropriate preventive maintenance for Valve 3JSCNUV0232 (P.2(b)). Inspection Report# : 2007003 (pdf)

Significance: May 25, 2007 Identified By: NRC Item Type: FIN Finding Ineffective Demonstration of Conformance to Design for the Alternate ac Power Sources The team identified a finding involving the implementation of Regulatory Guide 1.155, Station Blackout, Appendix A, for the demonstration of the station backout generator design and system readiness requirements. Specifically, established preventive maintenance tasks did not demonstrate that the coping requirements for the station blackout generator would be met for the approved increase from the 4-hour to 16-hour coping duration that, at the time this finding was identified, would become effective the following month. The licensee has entered this finding into their corrective action program as Palo Verde Action Request PVAR 2982699. The finding is greater than minor because it would become a more significant safety concern if left uncorrected following the implementation of the 16-hour coping duration. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to adequately evaluate the design and system readiness requirements for the station blackout generators for the approved license amendment that, at the time the finding was identified, would, increase the coping period to 16-hours. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Control of Design Information for the Station Blackout System The team identified a noncited violation of very low safety significance for the failure to implement the design control requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 1, Design Control and Procurement Control, to 10 CFR 50.63, Loss of All Alternating Current. Specifically, approved Design Change DMWO 2827452 did not account for key station blackout generator performance parameters that included fuel and lubricating oil consumption rates and required station blackout battery capacity for an increase in the station blackout coping period from 4 to16-hours. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the critical performance parameters for ensuring the station blackout generators would meet the 16-hour coping requirement were not established. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to evaluate the key performance parameters for the station blackout generators for the approved license amendment that increased the coping period to 16-hours. (Section 1R21b.2.) Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Non-conservative Containment Sump Level Analysis The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Appendix B, Criterion III, Design Control. Specifically, the design calculation that determined the minimum containment flood level following a loss-of-coolant accident was not based on the most limiting reactor coolant system break location. The calculated containment flood level was used to verify the adequacy of the available net positive suction head for the emergency core cooling pumps that would take suction from the containment sump during the recirculation phase of a postulated

loss-of-coolant accident. The licensee has entered this issue into their corrective action program as Palo Verde Action Request PVAR 2981257. This finding is greater than minor because this issue required accident analysis calculations to be re-performed to assure the accident requirements were met. The finding affected the mitigating systems cornerstone as related to the availability, reliability, and capability of the emergency core cooling system for post-loss-of-cooling accident. In accordance with Inspection Manual Chapter 0609, Significance Determination Process, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations, the team conducted a Phase 1 screening and determined the finding was of very low safety significance because it did not represent an actual loss of safety function. This deficiency would not have resulted in the emergency core cooling pumps becoming inoperable under the most limiting postulated accident conditions. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Maintenance on Target Rock Solenoid-Operated Valves The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Criterion XVI, Corrective Actions, for the failure to identify and correct significant conditions adverse to quality involving Target Rock valve failures. The licensee has entered this issue into their corrective action program as Palo Verde Nuclear Generating Station Action Requests PVAR 2984832 and 2985372. The failure to identify and correct the cause(s) of turbine-driven auxiliary feedwater pump Target Rock solenoid-operated valves was a performance deficiency. This issue is more than minor because it is associated separately with the mitigating systems cornerstone and on one occasion affected the containment barrier integrity cornerstone. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Change to Emergency Diesel Generator Intake Air Oil Bath Filter Standby Oil Level Specification The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to verify or check the adequacy of design for maintaining the emergency diesel generator air intake oil bath filters oil level below the "add oil" mark. Specifically, from approximately November 1994 to January 24, 2007, engineering personnel failed to translate vendor requirements for the Air Maze oil bath air filter oil level into an appropriate operating band. This issue was entered into the corrective action program as Condition Report/Disposition Request 2963525. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to be of very low safety significance because it did not represent an actual loss of system safety function, did not represent an actual loss of a single train for greater than its technical specification allowed outage time, and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. Inspection Report# : 2007002 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation

Failure to Identify Misalignment of Spring Cans The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of inservice inspection personnel to promptly identify misalignment of spring cans on safety-related piping. Specifically, between April 2005 and May 2006, inservice inspection personnel failed to identify misalignment of spring cans associated with the auxiliary feedwater system and the emergency diesel generators. Section 8.3.5 of Procedure 73TI-9ZZ18 required that the examination of piping systems should be directed to detect any relevant conditions, including misalignment of supports. This issue was entered into the corrective action program as Palo Verde Action Request 2980767. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the failure to identify degraded and non-conforming equipment conditions could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic flooding, or severe weather initiating event. The finding has a crosscutting aspect in the area of problem identification and resolution, associated with corrective action program, since inservice inspection personnel had an inappropriately high threshold for recognizing the misalignment of spring cans on safety-related piping. Inspection Report# : 2007002 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Technical Evaluation of HPSI Pump Bearing Oil Leaks A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with two examples was identified for two inadequate operability evaluations. Prompt operability determinations in CRDRs 2941494 and 2303499 incorrectly concluded that High Pressure Safety Injection Pumps 2A and 3A, respectively, could meet their mission time with existing oil leakage from the bearings. The team concluded that these evaluations relied upon unverified and incorrect assumptions and non-conservative volumes. The apparent cause evaluation for the leakage identified contributing causes that were common to all pumps, but the operability of the other pumps was not assessed. The team identified a history of small oil leaks in high pressure safety injection pumps since 2000, but the licensee was unaware of this trend. Subsequent testing confirmed that five of the six high pressure safety injection pumps had oil leakage which would not allow running those pumps for the full mission time, but sufficient oil was available to run for at least 94 days. This finding was determined to have cross-cutting aspects in the human performance area of decision-making, because the licensee did not use conservative assumptions and demonstrate that the proposed course of action was safe. Failure to adequately evaluate and correct oil leakage in High Pressure Safety Injection Pumps 2A and 3A, and failure to assess the extent of condition for similar pumps, was a performance deficiency. The finding was more than minor because it affected the equipment performance attribute of the mitigating systems cornerstone objective of ensuring the availability and reliability of a system that responds to initiating events. This finding screened as Green during Phase 1 of the significance determination process because it did not involve a loss of safety function. This issue was entered into the corrective action program under Condition Report/Disposition Report 2973682. Inspection Report# : 2007007 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Preventive Maintenance Change Backlog Was Not Tracking Due Dates A finding was identified for failure to schedule and perform preventive maintenance tasks that were in the preventive maintenance change process. The team identified that a backlog of over 2500 preventive maintenance changes existed which resulted in these preventive maintenance tasks not being scheduled or performed, potentially challenging completion within the specified frequency. The team found 438 examples of preventive maintenance tasks that were overdue, and an additional 2113 that had no due date assigned yet. This program was used to revise both safety-related and non-safety preventive maintenance tasks. Because these preventive maintenance tasks were in the change process, the tasks were not scheduled or tracked in a way that would show when they became overdue. This was

contrary to Procedure 30DP-9MP08, Preventive Maintenance Program, Revision 17, which required that no preventive maintenance on operational equipment shall pass that late date without an approved deferral which will address a technical justification for the identified issue. This finding had human performance cross-cutting aspects associated with resources because the large backlog of preventive maintenance tasks was contrary to maintaining long-term equipment reliability. Failure to track, schedule, and perform preventive maintenance activities within their specified frequencies in accordance with their preventive maintenance program was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, it could become a more significant safety concern in that the lack of preventive maintenance would affect the reliability of plant equipment which could impact the initiating events or mitigating systems cornerstones. Because of the large number of preventive maintenance tasks (over 2500) in this category, the team reviewed a sample of 79 tasks associated with safety-related or quality-class components to assess the significance. The team did not identify any examples of overdue safety-related tasks. Based on the lack of risk significant examples and the fact that this finding is not suitable for significance determination process evaluation, this issue was reviewed by NRC management and was determined to be a finding of very low safety significance. This issue was entered into the corrective action program under Palo Verde Action Request 2970076. Inspection Report# : 2007007 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation SCAFFOLDING ERECTED WITH INADEQUATE CLEARANCES AND NO ENGINEERING EVALUATION The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of maintenance and engineering personnel to follow Procedure 30DP-9WP11, "Scaffolding Instructions," Revision 13, and associated engineering specifications governing scaffold erection near safety-related components. Specifically, on September 13, 2006, inspectors identified three scaffolds that were within 2 inches of safety-related components. The scaffolding did not have an engineering evaluation in place, nor were there any documented records of engineering evaluations for any other scaffolding on site. Again on October 3, 2006, the inspectors identified two scaffolds that were directly attached to the fuel and auxiliary building essential air handling units, without the required evaluations. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Requests 2924707 and 2929770. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that improperly installed scaffolding could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and all subsequent engineering evaluations determined that there was no adverse effect to mitigating equipment. This finding has a crosscutting aspect in the area of human performance associated with work control because the licensee did not appropriately coordinate work activities to keep personnel apprised of the operational impact of work activities. Additionally, this finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective actions in that the licensee did not take appropriate corrective actions to address safety issues in a timely manner Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN SEISMIC QUALIFICATION OF POST ACCIDENT MONITORING INSTRUMENTATION The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the improper control of design parameters for post accident monitoring instrumentation by operations personnel. Specifically, prior to November 22, 2006, operations personnel did not maintain the seismic qualification of post accident monitoring instrumentation, by pulling recorders out from the fully inserted position for extended periods. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2945259.

The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that safety-related equipment that is not maintained in a seismically qualified condition may not be available to perform its safety function under certain accident conditions. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not affect the loss or degradation of equipment specifically designed to mitigate a seismic event, and it did not involve the total loss of any safety function that contributes to external event initiated core damage accident sequences Inspection Report# : 2006005 (pdf) Significance: Dec 31, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO MAINTAIN PROCEDURES AND INSTRUCTIONS The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Actions, for the failure to promptly identify and correct a condition adverse to quality. Specifically, since 1992, the licensee failed to maintain procedures and written instructions in accordance with quality assurance program requirements, including, periodic procedural reviews and implementation of the procedure feedback process. These issues resulted in a significant number of deficient procedures and instructions not being corrected in a timely manner and not receiving adequate reviews. One example involved the failure to provide adequate instructions for mounting temperature element housings adversely affecting seismic qualifications required to protect the functionality of safety related equipment. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2952142. This finding is greater than minor because the failure to identify and correct deficient procedures, if left uncorrected, would become a more significant safety concern in that quality related systems, structures, and components could be adversely affected by implementing inadequate instructions. Using the Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the finding is determined to have very low safety significance because it did not result in loss of operability per, Part 9900, Technical Guidance, Operability Determination Process for Operability and Functional Assessment. This finding involved problem identification and resolution crosscutting aspects associated with the failure to promptly identify and correct deficient procedures/instructions resulting in the potential to adversely affect quality related systems, structures, and components Inspection Report# : 2006005 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be

inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, states, in part, that for significant conditions adverse to quality, measures shall assure that the cause of the condition is determined and corrective action taken to preclude repetition. Specifically, on July 26, 2006, the licensee failed to assure that the cause of a significant condition adverse to quality was determined and that corrective action was taken to preclude repetition. Specifically, the licensee did not identify and correct the cause of the erratic Unit 3, Train A Emergency Diesel Generator K-1 relay operation prior to installation of the relay on July 26, 2006. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of problem identification and resolution in that the failure to fully evaluate and implement adequate corrective maintenance actions for the Unit 3 Train A emergency diesel generator resulted in the emergency diesel generator being inoperable for 18 days. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IMPLEMENT THE OPERABILITY DETERMINATION PROCESS The team identified two examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform operabilty determinations. In both examples, the licensee failed to perform an operability determination following identification of a degraded condition that had the potential to adversely affect the safety function of all emergency diesel generators. Specifically, an operability determination was not performed after identifying the failure of the Unit 3 Train A emergency diesel generator on July 25, 2006, was potentially the result of plastic debris affecting proper auxiliary contact operation of a K-1 relay. The licensee determined the debris most likely originated from a modification performed on all emergency diesel generator K-1 relays during initial plant startup. Following another failure of the Unit 3 Train A emergency diesel generator on September 22, 2006, an operability determination was not performed after identifying the failure was the result of the K-1 relay actuating arm not providing adequate compression of the auxiliary contacts. The licensee determined this degraded condition most likely originated during implementation a modification done to all emergency diesel generator K-1 relays during initial plant startup. This finding is greater than minor because the failure to follow the operability determination process, if left uncorrected, would become a more significant safety concern in that degraded or nonconforming conditions would not be properly evaluated. Using the Phase 1 worksheet in NRC Inspection Manual Chapter 0609, Significance Determination Process, the finding was determined to have very low safety significance because unreliable K-1 relay operation resulted in no actual loss of safety function of the other five emergency diesel generators prior to corrective actions being implemented, and the finding did not represent a potential risk significant condition because of a seismic, flooding, or severe weather event. This issue is documented in the licensees corrective action program as Condition Report/Disposition Requests 2928389 and 2940558. The cause of this finding is related to the crosscutting element of problem identification and resolution in that engineering personnel failed to properly evaluate and perform operability determinations for identified degraded conditions affecting the emergency diesel generators.

Inspection Report# : 2006012 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation INADEQUATE CORRECTIVE ACTIONS TO PRECLUDE WATER INTRUSION AND CORROSION OF UNDERGROUND PIPING AT THE FACILITY The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for failing to promptly correct water intrusion problems in multiple areas in the facility, that were identified and examined from January 1991 to April 2006. Specifically, the licensee failed to promptly correct the water intrusion problems in the facility piping vaults and manholes. This finding also had aspects of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for failing to maintain a vault in its watertight design condition and to coat exposed piping with its specified coating to ensure corrosion protection. This issue was entered into the licensees corrective action program as Condition Report/Disposition Requests 2885972, 2880283, and 2902572. The finding is greater than minor because it is associated with the equipment performance cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609," Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and there was no actual loss of piping material that exceeded the minimum allowable wall thickness or a loss of safety function that exceeded Technical Specification allowed outage times. This finding has a crosscutting aspect in the area of problem identification and resolution because the licensee failed to thoroughly evaluate a problem that existed from 1992 to April 2006. The failure to promptly correct this condition resulted in the degradation of the wall thickness of the spray pond piping and the Unit 3 emergency diesel generator Train A being declared inoperable after the fuel transfer pump did not meet the acceptance criteria during a surveillance Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation TESTING PERFORMED BEYOND THE SCOPE OF THE FUNCTIONAL RELEASE The inspectors identified a noncited violation of Technical Specification 5.4.1.a for the failure of operations personnel to follow procedures for plant modifications when performing a surveillance test that impacted a component that had been recently modified. Specifically, on April 25, 2006, operations personnel used flow Element 3JSIBFE0348, a modified component that did not have a functional release, to perform surveillance testing of emergency core cooling system check valves. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2887268. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the condition only affected the mitigating systems cornerstone and did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee did not follow established procedures. The failure to follow procedures resulted in the performance of testing not allowed by a functional release Inspection Report# : 2006004 (pdf) Significance: Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY CONDITIONS ADVERSE TO QUALITY FOR THE EMERGENCY DIESEL GENERATORS The inspectors identified multiple examples of a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI,

"Corrective Action," for failing to identify degraded material conditions on the emergency diesel generators. Between July and September 2006, operations and engineering personnel did not promptly identify and correct material conditions adverse to quality. Specifically, operations and engineering personnel did not identify numerous fluid leaks, and loose and missing fasteners on the emergency diesel generator skid, and did not enter them in the corrective action program. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2914886. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that unidentified conditions adverse to quality could challenge the operability of equipment important to safety. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in the actual loss of safety function to any component, train, or system. This finding has a crosscutting aspect in the area of problem identification and resolution because failing to implement the corrective action program with a low threshold for identifying adverse material conditions resulted in degradation of the emergency diesel generators which was not being tracked and evaluated Inspection Report# : 2006004 (pdf) Significance: SL-IV Nov 03, 2006 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SUBMIT COMPLETE REVISIONS TO THE UPDATED FINAL SAFETY ANALYSIS REPORT FOR PERMANENT MODIFICATIONS The inspectors identified a noncited violation of 10 CFR 50.71(e)(4) for the failure to file revisions to the Updated Final Safety Analysis Report. Specifically, Procedure 93DP-0LC03, "Licensing Document Maintenance," Revision 13, Step 3.5.6, required that temporary modifications that are in place for greater than 24 months be incorporated into the Updated Final Safety Analysis Report. Temporary modifications for heated junction thermocouples were installed for greater than 24 months and a revision to the Updated Final Safety Analysis Report was not made. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 2894741. The performance deficiency associated with this finding involved the failure of licensee personnel to submit revisions to the Updated Final Safety Analysis Report reflecting temporary modifications installed in Unit 3 for more than 24 months. The finding was determined to be applicable to traditional enforcement because the NRCs ability to perform its regulatory function was potentially impacted by the licensees failure to revise the Updated Final Safety Analysis Report in a timely manner. The finding was determined to be a Severity Level IV violation in accordance with Section D.4 of Supplement I of the NRC Enforcement Policy. The finding is not suitable for evaluation using the significance determination process, but has been reviewed by NRC management and is determined to be a finding of very low safety significance. This finding has a crosscutting aspect in the area of human performance associated with work practices because not following established procedures led to an inaccurate Updated Final Safety Analysis Report Inspection Report# : 2006004 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following

implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the

Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Emergency Preparedness Significance: Sep 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY AND CRITIQUE AN EVENT CLASSIFICATION WEAKNESS The inspectors identified a noncited violation of 10 CFR 50.54(q) for failure of the emergency planning organization's emergency exercise critique process to identify for correction an emergency plan weakness associated with a risk significant planning standard. Specifically, during the critique of the Emergency Preparedness portion of the August 22, 2007, Force-On-Force exercise, the licensee failed to identify for correction an event classification weakness. The weakness occurred during the exercise when the shift manager did not recognize a credible security threat notification was made to the facility. As a result, the shift manager did not declare a Notice of Unusual Event as required by EPIP-99, Appendix A, "Emergency Actions Levels - EAL 7-1." This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3056153. This finding is greater than minor because it is associated with the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and affects the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. In accordance with Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness Significance Determination Process, this finding is determined to have very low safety significance because, although it was a failure to comply with NRC requirements, it did not involve the risk-significant aspects of a planning standard as defined in Manual Chapter 0609, Appendix B, Section 2.0; and was not a planning standard functional failure because the critique failure occurred in a small scale drill with limited emergency response organization participation and evaluation. This finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective action program because the threshold for identifying issues was not sufficiently low. Specifically, the emergency planning evaluator did not recognize the shift manager's failure to make the Notice of Unusual Event classification during the Force-On-Force exercise. Therefore, the exercise critique did not identify and correct the event classification deficiency as required (P.1(a)). Inspection Report# : 2007004 (pdf) Occupational Radiation Safety

Public Radiation Safety Significance: Feb 22, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to control the release of radioactive material A self-revealing, noncited violation of Technical Specification 5.4.1 was reviewed regarding the failure to control the release of radioactive material. On February 2, 2006, the licensee was notified by another site that equipment received was labeled as radioactive material. Specifically, five items, with a maximum activity of 280 counts per minute, were inappropriately released from the radiologically controlled area and subsequently the protected area. The licensee's corrective actions include evaluating and implementing changes to the material release program and processes. The finding is greater than minor because it was associated with the Public Radiation Safety cornerstone attribute of human performance and affected the associated cornerstone objective to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain as a result of routine civilian nuclear reactor operation. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. In addition, this finding had a human performance cross-cutting aspect associated with work practices because the licensee failed to ensure supervisory and management oversight of work activities, including contractors Inspection Report# : 2007010 (pdf) Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Summary Finding. Biennial PI&R Assessment The team concluded that the thresholds for identifying and classifying issues were appropriately low, although several instances were identified where new aspects to complex problems were identified but not broken out and addressed properly. Numerous changes were made to the corrective action program and some improvement was evident, but some of the changes were not yet fully effective. The new Palo Verde Action Request was introduced, and senior managers were assigned to determine which actions were required in order to improve the consistency of problem treatment. Problems involving operability questions were getting to control room operators more consistently, but NRC inspectors continued to identify operability concerns that were missed by the licensee. However, having the Action Request Review Committee review all problem reports created a bottleneck in the process, creating delays in getting problems from the identification to a working stage. Problems continue to exist in the quality of problem description and significance determination. The timeliness of problem cause evaluations were improving due to management attention, but were still several times longer than station goals and industry standards. Palo Verde Nuclear Generating Station continued to have a large number of latent equipment issues. Numerous longstanding material conditions exist which have received limited assessments and get added to the backlog with routine priority. The NRC continued to identify examples where the significance was underestimated by the licensee and were not being addressed with the timeliness commensurate with the actual safety significance until the NRC gets

involved. The team noted that significant challenges have been created because there are large backlogs of work affecting work control, maintenance support, and a variety of engineering activities. These backlogs are affecting the sites ability to address problems in a timely manner. It is apparent that these backlogs have built up over a period of years with the knowledge of management. The Nuclear Assurance Department was active in the internal oversight role and focused on current performance problems, issuing reports that provided useful assessments. Other self-assessments reviewed were frequently narrow in scope and of limited depth. Interviews with site workers indicated that a safety-conscious work environment exists at Palo Verde Nuclear Generating Station, and that workers had an improved confidence in the strength of the safety culture. However, there was less confidence that routine priority issues will get addressed in a timely manner. Inspection Report# : 2007007 (pdf) Last modified : December 07, 2007

Palo Verde 3 4Q/2007 Plant Inspection Findings Initiating Events Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SCOPE CONDENSATE DEMINERALIZER VALVE INTO MAINTENANCE RULE A self-revealing noncited violation of 10 CFR 50.65(b) was identified for the failure of engineering personnel to place some components of the condensate demineralizer system into the scope of its program for monitoring the effectiveness of maintenance. Specifically, on October 19, 2006, Unit 3 reactor was manually tripped when condenser vacuum was degraded due to the failure of condensate demineralizer vessel waste drain Valve 3JSCNUV0232. Prior operating experience at Palo Verde demonstrated that the failure of Valve 3JSCNUV0232 could result in a reactor trip. However, the licensee did not appropriately scope Valve 3JSCNUV0232 into its program for monitoring the effectiveness of maintenance. This issue was entered into the corrective action program as Condition Report/Disposition Request 3035444. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it does not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. Inspection Report# : 2007003 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO APPLY INDUSTRY OPERATING EXPERIENCE TO MAINTENANCE ACTIVITIES RESULTS IN A PLANT TRANSIENT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," for the failure of inservice inspection personnel to promptly identify and correct a condition adverse to quality. Specifically, since April 19, 2006, floor-welded spray pond pipe Supports 13-SP-030-H-007 and 13-SP-030-H-008 in the essential pipe density tunnel became degraded at the weld due to long term standing water in the tunnel. The licensee thought these supports had been previously identified and placed in the corrective action program, but that was not the case. This issue was entered into the corrective action program as Palo Verde Action Request 2989960. The finding is greater than minor because if left uncorrected the degradation would have led to a more significant safety concern. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. The cause of the finding is also related to the crosscutting aspect of problem identification and resolution with a corrective action program causal factor because the threshold for identifying issues was not sufficiently low and the degraded supports were not identified completely, accurately, and in a timely manner commensurate with their safety significance (P.1. (a)). Inspection Report# : 2007003 (pdf)

Mitigating Systems Significance: Aug 17, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate procedure for safe shutdown from outside the control room Green. The team identified a noncited violation of License Conditions 2.C.(7), 2.F and 2.C.(6) for Units 1, 2, and 3, respectively. Specifically, procedures required by 10 CFR Part 50, Appendix R, Section III.G.3 and III.L.3 had deficiencies that might impact the ability to complete a number of time-critical steps required to safely shutdown the facility following a fire in the control room. This was because the licensee failed to provide a number of tools necessary to complete the procedure as written. The team determined that, although operators did not use the equipment during time-critical steps, the lack of tools could negatively impact the ability to accomplish subsequent time-critical steps. This deficiency was more than minor because the finding is associated with the Protection Against External Factors attribute of the Mitigating Systems Cornerstone since it could affect the the availability, reliability, and capability of systems that respond to a fire events to prevent undesirable consequences. Using the guidance of Manual Chapter 0609, Appendix F, Attachment 2, the deficiency was determined to have a low degradation rating because it involved a procedural deficiency that was compensated by operator experience/familiarity, and revised calculations demonstrated that there was sufficient time margin available to complete the actions. Based on this, the finding screened as having very low safety significance (Green) during a Phase 1 significance determination. This finding had cross-cutting aspects in the area of human performance because the licensee failed to ensure that personnel, equipment, procedures, and other resources were available and adequate to assure nuclear safety. Specifically, the licensee did not ensure that adequate emergency equipment was available to support procedure completion. (H.2(d)). Inspection Report# : 2007008 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADED STRUCTURAL SUPPORTS A self-revealing noncited violation of 10 CFR 50.65(a)(3) was identified for failure of the licensee to incorporate internal and external industry operating experience into preventative maintenance activities that could have prevented a maintenance rule functional failure of feedwater pump Turbine A, a high risk heat removal system. Specifically, prior to March 18, 2007, the licensee did not incorporate available operating experience into preventative maintenance instructions to inspect, clean, and verify acceptable equipment condition for the linear variable differential transmitter linkage assembly. Failure to inspect and clean the linear variable differential transmitter linkage assembly resulted in a broken linkage, due to binding, causing erratic cycling of the feedwater pump turbine control valves resulting in a manual trip of feedwater Pump A and reactor power cutback to 48 percent power. This issue was entered into the corrective action program as Condition Report/Disposition Request 2984713. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in exceeding the Technical Specification limit for identified reactor coolant system leakage and did not affect other mitigation systems; the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and the finding did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of problem identification and resolution, associated with operating experience, since engineering personnel failed to account for prior operating experience in determining the maintenance rule scope and appropriate preventive maintenance for Valve 3JSCNUV0232 (P.2(b)). Inspection Report# : 2007003 (pdf) Significance: May 25, 2007

Identified By: NRC Item Type: FIN Finding Ineffective Demonstration of Conformance to Design for the Alternate ac Power Sources The team identified a finding involving the implementation of Regulatory Guide 1.155, Station Blackout, Appendix A, for the demonstration of the station backout generator design and system readiness requirements. Specifically, established preventive maintenance tasks did not demonstrate that the coping requirements for the station blackout generator would be met for the approved increase from the 4-hour to 16-hour coping duration that, at the time this finding was identified, would become effective the following month. The licensee has entered this finding into their corrective action program as Palo Verde Action Request PVAR 2982699. The finding is greater than minor because it would become a more significant safety concern if left uncorrected following the implementation of the 16-hour coping duration. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to adequately evaluate the design and system readiness requirements for the station blackout generators for the approved license amendment that, at the time the finding was identified, would, increase the coping period to 16-hours. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Control of Design Information for the Station Blackout System The team identified a noncited violation of very low safety significance for the failure to implement the design control requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 1, Design Control and Procurement Control, to 10 CFR 50.63, Loss of All Alternating Current. Specifically, approved Design Change DMWO 2827452 did not account for key station blackout generator performance parameters that included fuel and lubricating oil consumption rates and required station blackout battery capacity for an increase in the station blackout coping period from 4 to16-hours. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the critical performance parameters for ensuring the station blackout generators would meet the 16-hour coping requirement were not established. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to evaluate the key performance parameters for the station blackout generators for the approved license amendment that increased the coping period to 16-hours. (Section 1R21b.2.) Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Non-conservative Containment Sump Level Analysis The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Appendix B, Criterion III, Design Control. Specifically, the design calculation that determined the minimum containment flood level following a loss-of-coolant accident was not based on the most limiting reactor coolant system break location. The calculated containment flood level was used to verify the adequacy of the available net positive suction head for the emergency core cooling pumps that would take suction from the containment sump during the recirculation phase of a postulated loss-of-coolant accident. The licensee has entered this issue into their corrective action program as Palo Verde Action Request PVAR 2981257.

This finding is greater than minor because this issue required accident analysis calculations to be re-performed to assure the accident requirements were met. The finding affected the mitigating systems cornerstone as related to the availability, reliability, and capability of the emergency core cooling system for post-loss-of-cooling accident. In accordance with Inspection Manual Chapter 0609, Significance Determination Process, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations, the team conducted a Phase 1 screening and determined the finding was of very low safety significance because it did not represent an actual loss of safety function. This deficiency would not have resulted in the emergency core cooling pumps becoming inoperable under the most limiting postulated accident conditions. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Maintenance on Target Rock Solenoid-Operated Valves The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Criterion XVI, Corrective Actions, for the failure to identify and correct significant conditions adverse to quality involving Target Rock valve failures. The licensee has entered this issue into their corrective action program as Palo Verde Nuclear Generating Station Action Requests PVAR 2984832 and 2985372. The failure to identify and correct the cause(s) of turbine-driven auxiliary feedwater pump Target Rock solenoid-operated valves was a performance deficiency. This issue is more than minor because it is associated separately with the mitigating systems cornerstone and on one occasion affected the containment barrier integrity cornerstone. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Change to Emergency Diesel Generator Intake Air Oil Bath Filter Standby Oil Level Specification The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to verify or check the adequacy of design for maintaining the emergency diesel generator air intake oil bath filters oil level below the "add oil" mark. Specifically, from approximately November 1994 to January 24, 2007, engineering personnel failed to translate vendor requirements for the Air Maze oil bath air filter oil level into an appropriate operating band. This issue was entered into the corrective action program as Condition Report/Disposition Request 2963525. The finding is greater than minor because it is associated with the design control attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to be of very low safety significance because it did not represent an actual loss of system safety function, did not represent an actual loss of a single train for greater than its technical specification allowed outage time, and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. Inspection Report# : 2007002 (pdf) Significance: Mar 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify Misalignment of Spring Cans The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for

the failure of inservice inspection personnel to promptly identify misalignment of spring cans on safety-related piping. Specifically, between April 2005 and May 2006, inservice inspection personnel failed to identify misalignment of spring cans associated with the auxiliary feedwater system and the emergency diesel generators. Section 8.3.5 of Procedure 73TI-9ZZ18 required that the examination of piping systems should be directed to detect any relevant conditions, including misalignment of supports. This issue was entered into the corrective action program as Palo Verde Action Request 2980767. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the failure to identify degraded and non-conforming equipment conditions could impact the availability of mitigating equipment. The finding affected the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic flooding, or severe weather initiating event. The finding has a crosscutting aspect in the area of problem identification and resolution, associated with corrective action program, since inservice inspection personnel had an inappropriately high threshold for recognizing the misalignment of spring cans on safety-related piping. Inspection Report# : 2007002 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Technical Evaluation of HPSI Pump Bearing Oil Leaks A noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," with two examples was identified for two inadequate operability evaluations. Prompt operability determinations in CRDRs 2941494 and 2303499 incorrectly concluded that High Pressure Safety Injection Pumps 2A and 3A, respectively, could meet their mission time with existing oil leakage from the bearings. The team concluded that these evaluations relied upon unverified and incorrect assumptions and non-conservative volumes. The apparent cause evaluation for the leakage identified contributing causes that were common to all pumps, but the operability of the other pumps was not assessed. The team identified a history of small oil leaks in high pressure safety injection pumps since 2000, but the licensee was unaware of this trend. Subsequent testing confirmed that five of the six high pressure safety injection pumps had oil leakage which would not allow running those pumps for the full mission time, but sufficient oil was available to run for at least 94 days. This finding was determined to have cross-cutting aspects in the human performance area of decision-making, because the licensee did not use conservative assumptions and demonstrate that the proposed course of action was safe. Failure to adequately evaluate and correct oil leakage in High Pressure Safety Injection Pumps 2A and 3A, and failure to assess the extent of condition for similar pumps, was a performance deficiency. The finding was more than minor because it affected the equipment performance attribute of the mitigating systems cornerstone objective of ensuring the availability and reliability of a system that responds to initiating events. This finding screened as Green during Phase 1 of the significance determination process because it did not involve a loss of safety function. This issue was entered into the corrective action program under Condition Report/Disposition Report 2973682. Inspection Report# : 2007007 (pdf) Significance: Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Preventive Maintenance Change Backlog Was Not Tracking Due Dates A finding was identified for failure to schedule and perform preventive maintenance tasks that were in the preventive maintenance change process. The team identified that a backlog of over 2500 preventive maintenance changes existed which resulted in these preventive maintenance tasks not being scheduled or performed, potentially challenging completion within the specified frequency. The team found 438 examples of preventive maintenance tasks that were overdue, and an additional 2113 that had no due date assigned yet. This program was used to revise both safety-related and non-safety preventive maintenance tasks. Because these preventive maintenance tasks were in the change process, the tasks were not scheduled or tracked in a way that would show when they became overdue. This was contrary to Procedure 30DP-9MP08, Preventive Maintenance Program, Revision 17, which required that no preventive maintenance on operational equipment shall pass that late date without an approved deferral which will

address a technical justification for the identified issue. This finding had human performance cross-cutting aspects associated with resources because the large backlog of preventive maintenance tasks was contrary to maintaining long-term equipment reliability. Failure to track, schedule, and perform preventive maintenance activities within their specified frequencies in accordance with their preventive maintenance program was a performance deficiency. This finding was determined to be more than minor because, if left uncorrected, it could become a more significant safety concern in that the lack of preventive maintenance would affect the reliability of plant equipment which could impact the initiating events or mitigating systems cornerstones. Because of the large number of preventive maintenance tasks (over 2500) in this category, the team reviewed a sample of 79 tasks associated with safety-related or quality-class components to assess the significance. The team did not identify any examples of overdue safety-related tasks. Based on the lack of risk significant examples and the fact that this finding is not suitable for significance determination process evaluation, this issue was reviewed by NRC management and was determined to be a finding of very low safety significance. This issue was entered into the corrective action program under Palo Verde Action Request 2970076. Inspection Report# : 2007007 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, states, in part, that for significant conditions adverse to quality, measures shall assure that the cause of the condition is determined and corrective action taken to preclude repetition. Specifically, on July 26, 2006, the licensee failed to assure that the cause of a significant condition adverse to quality was determined and that corrective action was taken to preclude repetition. Specifically, the licensee did not identify and correct the cause of the erratic Unit 3, Train A Emergency Diesel Generator K-1 relay operation prior to installation of the relay on July 26, 2006. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of problem identification and resolution in that the failure to fully evaluate and implement adequate corrective maintenance actions for the Unit 3 Train A emergency diesel generator resulted in the emergency diesel generator being inoperable for 18 days.

The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected

device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Emergency Preparedness Significance: Sep 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY AND CRITIQUE AN EVENT CLASSIFICATION WEAKNESS The inspectors identified a noncited violation of 10 CFR 50.54(q) for failure of the emergency planning organization's emergency exercise critique process to identify for correction an emergency plan weakness associated with a risk

significant planning standard. Specifically, during the critique of the Emergency Preparedness portion of the August 22, 2007, Force-On-Force exercise, the licensee failed to identify for correction an event classification weakness. The weakness occurred during the exercise when the shift manager did not recognize a credible security threat notification was made to the facility. As a result, the shift manager did not declare a Notice of Unusual Event as required by EPIP-99, Appendix A, "Emergency Actions Levels - EAL 7-1." This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3056153. This finding is greater than minor because it is associated with the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and affects the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. In accordance with Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness Significance Determination Process, this finding is determined to have very low safety significance because, although it was a failure to comply with NRC requirements, it did not involve the risk-significant aspects of a planning standard as defined in Manual Chapter 0609, Appendix B, Section 2.0; and was not a planning standard functional failure because the critique failure occurred in a small scale drill with limited emergency response organization participation and evaluation. This finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective action program because the threshold for identifying issues was not sufficiently low. Specifically, the emergency planning evaluator did not recognize the shift manager's failure to make the Notice of Unusual Event classification during the Force-On-Force exercise. Therefore, the exercise critique did not identify and correct the event classification deficiency as required (P.1(a)). Inspection Report# : 2007004 (pdf) Occupational Radiation Safety Public Radiation Safety Significance: Feb 22, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to control the release of radioactive material A self-revealing, noncited violation of Technical Specification 5.4.1 was reviewed regarding the failure to control the release of radioactive material. On February 2, 2006, the licensee was notified by another site that equipment received was labeled as radioactive material. Specifically, five items, with a maximum activity of 280 counts per minute, were inappropriately released from the radiologically controlled area and subsequently the protected area. The licensee's corrective actions include evaluating and implementing changes to the material release program and processes. The finding is greater than minor because it was associated with the Public Radiation Safety cornerstone attribute of human performance and affected the associated cornerstone objective to ensure adequate protection of public health and safety from exposure to radioactive materials released into the public domain as a result of routine civilian nuclear reactor operation. Using the Public Radiation Safety Significance Determination Process, the team determined that the finding had very low safety significance because: (1) it was a radioactive material control finding, (2) it was not a transportation finding, (3) it did not result in public dose greater than 0.005 rem, and (4) the number of occurrences was not greater than five. In addition, this finding had a human performance cross-cutting aspect associated with work practices because the licensee failed to ensure supervisory and management oversight of work activities, including contractors Inspection Report# : 2007010 (pdf) Physical Protection

Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Feb 09, 2007 Identified By: NRC Item Type: FIN Finding Summary Finding. Biennial PI&R Assessment The team concluded that the thresholds for identifying and classifying issues were appropriately low, although several instances were identified where new aspects to complex problems were identified but not broken out and addressed properly. Numerous changes were made to the corrective action program and some improvement was evident, but some of the changes were not yet fully effective. The new Palo Verde Action Request was introduced, and senior managers were assigned to determine which actions were required in order to improve the consistency of problem treatment. Problems involving operability questions were getting to control room operators more consistently, but NRC inspectors continued to identify operability concerns that were missed by the licensee. However, having the Action Request Review Committee review all problem reports created a bottleneck in the process, creating delays in getting problems from the identification to a working stage. Problems continue to exist in the quality of problem description and significance determination. The timeliness of problem cause evaluations were improving due to management attention, but were still several times longer than station goals and industry standards. Palo Verde Nuclear Generating Station continued to have a large number of latent equipment issues. Numerous longstanding material conditions exist which have received limited assessments and get added to the backlog with routine priority. The NRC continued to identify examples where the significance was underestimated by the licensee and were not being addressed with the timeliness commensurate with the actual safety significance until the NRC gets involved. The team noted that significant challenges have been created because there are large backlogs of work affecting work control, maintenance support, and a variety of engineering activities. These backlogs are affecting the sites ability to address problems in a timely manner. It is apparent that these backlogs have built up over a period of years with the knowledge of management. The Nuclear Assurance Department was active in the internal oversight role and focused on current performance problems, issuing reports that provided useful assessments. Other self-assessments reviewed were frequently narrow in scope and of limited depth. Interviews with site workers indicated that a safety-conscious work environment exists at Palo Verde Nuclear Generating Station, and that workers had an improved confidence in the strength of the safety culture. However, there was less confidence that routine priority issues will get addressed in a timely manner. Inspection Report# : 2007007 (pdf) Last modified : February 04, 2008

Palo Verde 3 1Q/2008 Plant Inspection Findings Initiating Events Significance: Nov 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Implementation of Risk Management Actions and Risk Assessments for the Switchyard Green. The team identified a noncited violation of 10 CFR 50.65(a)(4) for the failure to adequately assess the increase in risk and effectively implement risk mitigation actions for maintenance activities in the switchyard. Specifically, the switchyard was not being protected by controlling access and movement as required and the risk modeling did not include all work being performed. The Unit 1 shift manager and the switchyard coordinator were unaware of the movement of multiple vehicles and pieces of equipment in or near restricted areas and not all maintenance was included in the schedule provided to the switchyard coordinator for risk review. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3078392. This finding is greater than minor because the licensees risk assessment failed to consider maintenance activities that could increase the likelihood of initiating events such as work in the switchyard and failed to effectively manage compensatory measures. Inspection Manual Chapter 0609, Significance Determination Process, Appendix K, Maintenance Risk Assessment and Risk Management Significance Determination Process, was used to assess the significance. Using data from the licensees probabilistic risk assessment, a NRC Region IV senior reactor analyst calculated the risk deficit. Based on the magnitude of the calculated risk deficit being less than 1E-6/year, this finding is determined to be of very low safety significance. The cause of this finding has crosscutting aspects associated with work control of the human performance area in that the licensee did not appropriately coordinate switchyard activities incorporating risk insights (H.3.(a)) and did not communicate with each other during activities in which coordination is necessary to assure plant and human performance (H.3.(b)). Inspection Report# : 2007012 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO SCOPE CONDENSATE DEMINERALIZER VALVE INTO MAINTENANCE RULE A self-revealing noncited violation of 10 CFR 50.65(b) was identified for the failure of engineering personnel to place some components of the condensate demineralizer system into the scope of its program for monitoring the effectiveness of maintenance. Specifically, on October 19, 2006, Unit 3 reactor was manually tripped when condenser vacuum was degraded due to the failure of condensate demineralizer vessel waste drain Valve 3JSCNUV0232. Prior operating experience at Palo Verde demonstrated that the failure of Valve 3JSCNUV0232 could result in a reactor trip. However, the licensee did not appropriately scope Valve 3JSCNUV0232 into its program for monitoring the effectiveness of maintenance. This issue was entered into the corrective action program as Condition Report/Disposition Request 3035444. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it does not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. Inspection Report# : 2007003 (pdf) Significance: Jun 30, 2007

Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO APPLY INDUSTRY OPERATING EXPERIENCE TO MAINTENANCE ACTIVITIES RESULTS IN A PLANT TRANSIENT The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," for the failure of inservice inspection personnel to promptly identify and correct a condition adverse to quality. Specifically, since April 19, 2006, floor-welded spray pond pipe Supports 13-SP-030-H-007 and 13-SP-030-H-008 in the essential pipe density tunnel became degraded at the weld due to long term standing water in the tunnel. The licensee thought these supports had been previously identified and placed in the corrective action program, but that was not the case. This issue was entered into the corrective action program as Palo Verde Action Request 2989960. The finding is greater than minor because if left uncorrected the degradation would have led to a more significant safety concern. The finding is associated with the mitigating systems cornerstone. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. The cause of the finding is also related to the crosscutting aspect of problem identification and resolution with a corrective action program causal factor because the threshold for identifying issues was not sufficiently low and the degraded supports were not identified completely, accurately, and in a timely manner commensurate with their safety significance (P.1. (a)). Inspection Report# : 2007003 (pdf) Significance: Jan 01, 2007 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to maintain Control of Transient Combustibles Green. The team identified a noncited violation of Technical Specification 5.4.1.d for the failure of fire protection personnel to follow Procedure 14DP-0FP33, "Control of Transient Combustibles," Revision 15. Specifically, the team identified that on the 70 elevation of the Auxiliary Building (Radiation Protection Remote Monitoring Station) and in the Unit 3 containment, there were transient combustibles being stored without the proper evaluation and required permits. This issue was entered into the corrective action program as Palo Verde Action Request 3071785. The finding is considered more than minor because storing unanalyzed material could result in the potential to exceed combustible limits and is associated with an increase in the likelihood of an initiating event. Using Inspection Manual Chapter 0609, Significance Determination Process, Appendix F, Fire Protection Significance Determination Process," this issue affected the Fire Prevention and Administrative Controls Category. In this case the stored materials required a permit per the licensees procedure; however, the area was attended, fire detection and suppression was available, and the amounts did not exceed the loading calculation to the point of changing the loading classification. Therefore, this finding is considered of Low Degradation and had very low safety significance. The cause of this finding has crosscutting aspects associated with work practices in the human performance area because (1) the licensee failed to communicate human error prevention techniques such that work activities were performed safely (H.4.(a)), and (2) the licensee did not effectively communicate expectations regarding procedural compliance (H.4.(b)). The cause of this finding is also related to the safety culture component of accountability in that fire protection personnel failed to demonstrate a proper safety focus and reinforce safety principles among their peers (O.1.(c)). Inspection Report# : 2007012 (pdf) Mitigating Systems Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation

Failure to Establish Preventative Maintenance Procedures for Emergency Diesel Generator Fuel Oil Injection Pump O-Rings The inspectors identified a non-cited violation of Technical Specification 5.4.1.a for the failure of operations and engineering personnel to establish and implement maintenance procedures for inspection and replacement of items that have a specific lifetime. Specifically, between February 12, 2007 and March 7, 2008, operations and engineering personnel failed to inspect or replace the emergency diesel generators fuel oil injection pump upper O-rings prior to the end of their service life resulting in fuel leakage and increased unavailability and unreliability of Unit 1 Train A, Unit 2 Train B, and Unit 3 Train B emergency diesel generators. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3143422. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because the licensee failed to use available operating experience, including vendor recommendations, to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to Properly Implement the Systematic Troubleshooting Process The inspectors identified two examples of a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of operations, engineering, and maintenance personnel to follow procedures for troubleshooting failures of safety related components. Specifically, between January 8 and January 13, 2008, operations, engineering, and maintenance personnel failed to incorporate the adequate level of detail into their troubleshooting plans for the Unit 3 auxiliary feedwater trip and throttle Valve AFA HV 0054 when it failed to fully close upon demand from the control room hand switch, and for the Unit 3 log power Channel A when induced noise was present. These issues were entered into the licensee's corrective action program as Palo Verde Action Requests 3120075 and 3118744. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. Both examples have a crosscutting aspect in the area of human performance associated with decision making because the licensee did not obtain appropriate interdisciplinary input and reviews on safety significant or risk significant decisions [H.1(a)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Adequate Staffing Levels Results in Heavy Use of Overtime to Maintain Adequate Shift Coverage The inspectors identified a non-cited violation of Technical Specification 5.2.2.d involving the routine use of excessive overtime for operations personnel that performed safety-related functions. Specifically, between January 1 and December 31, 2007, operations personnel routinely used excessive overtime. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3112231.

The finding is greater than minor because if left uncorrected the finding would become a more significant safety concern in that the routine use of excessive work hours increases the likelihood of operator errors. Using the IMC 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because no specific human performance issues due to personnel fatigue were identified that resulted in the degradation or loss of safety function of equipment important to safety. The finding has a crosscutting aspect in the area of human performance associated with resources because the licensee failed to maintain sufficient qualified operations personnel to maintain working hours within guidelines without the excessive use of overtime [H.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Class 1E 125 V DC System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to ensure that potentially nonconforming conditions associated with the Class 1E 125 Vdc system were reviewed for operability. Specifically, between September 29, 2007 and March 7, 2008, engineering personnel failed to ensure all relevant information was reviewed for operability when it was determined that vendor recommended preventative maintenance tasks were not being performed on the Class 1E 125 Vdc system. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3144707. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because safety significant decisions were not verified to validate underlying assumptions and identify unintended consequences [H.1(b)]. Inspection Report# : 2008002 (pdf) Significance: Dec 31, 2007 Identified By: Self-Revealing Item Type: NCV NonCited Violation FAILURE TO TAKE ADEQUATE CORRECTIVE ACTIONS TO PREVENT RECURRENCE OF A SIGNIFICANT CONDITION ADVERSE TO QUALITY A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Actions," was identified for the failure of engineering personnel to promptly correct a significant condition adverse to quality. Specifically, on September 17, 2007, steam supply to auxiliary feedwater Pump A bypass Valve SGA-UV-138A failed to open as required during the performance of the quarterly surveillance test. The cause of the failure was determined to be foreign material on the valves internal components. Corrective actions were implemented but the source of the debris was not definitively identified. Subsequently, on October 15, 2007, the valve failed to close. Further investigation indicated that the failure was caused by foreign material on the valves internal components. This issue was entered into the corrective action program as Condition Report/Disposition Request 3078032. The finding is greater than minor because a failure to open is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, a failure to close is associated with the structure, system, and component and barrier performance attribute of the barrier integrity cornerstone and affects the associated cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, this finding is

determined to have very low safety significance because the finding did not result in a loss of safety function under the mitigating systems cornerstone and did not result in an actual open pathway in the physical integrity of the reactor containment under the containment barrier cornerstone. This finding has a crosscutting aspect in the area of human performance associated with work control because the facility did not dedicate the manpower and expertise necessary to coordinate work activities to incorporate actions to support long term equipment reliability and safety system availability (H.3(b)). Inspection Report# : 2007005 (pdf) Significance: Oct 26, 2007 Identified By: NRC Item Type: NCV NonCited Violation Eight Examples of the Failure to Implement the operability Determination Process Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," with eight examples for the failure of the licensee to adequately evaluate degraded and unanalyzed conditions to support operability decision making between May 2006 and October 26, 2007. The team noted a significant number of weak or non-existent operability evaluations of degraded conditions affecting safety-related equipment. There was a lack of understanding of the need to assess operability for some conditions adverse to quality and a lack of knowledge or skills necessary to conduct quality operability assessments. The examples of the violation involved two instances of conditions adverse to quality documented in databases outside of the corrective action program, missile hazards near the essential spray pond, two issues effecting essential cooling water system heat exchangers, 480V and 4160V motor terminations, oil leaks on the emergency diesel generators, and high lead content in a Unit 3 low pressure safety injection pump. Each of the individual technical issues was entered into the licensees corrective action program. These examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel (1) did not make safety significant decisions using a systematic process (H.1.(a)), and (2) failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding also have crosscutting aspects associated with evaluation and corrective action of the problem identification and resolution area in that licensee personnel (1) did not assess conditions adverse to quality for impacts to the operability of safety- related equipment (P.1.(c), and (2) did not address safety issues in a timely manner P.1.(d)). The causes of the examples of this finding also related to the safety culture component of accountability in that workers and managers failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish maintenance Rule Goals for the Safety Injection System Green. The team identified a noncited violation of 10 CFR 50.65, for the failure of engineering personnel to establish goals and monitor the performance of the safety injection system. Specifically, on March 22, 2007, engineering personnel failed to establish goals to properly monitor system performance, or provide a technical justification to demonstrate that monitoring under 10 CFR 50.65(a)(1) was not required for the safety injection system following the system changing status from 10 CFR 50.65(a)(2) to 10 CFR 50.65(a)(1). This issue was entered into the corrective action program as Palo Verde Action Requests 3074255 and 3076699. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significant Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety

significance since there was no loss of safety function. The cause of this finding has crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area in that engineering personnel failed to take appropriate actions to address safety issues and adverse trends in a timely manner (P.1.(d)) and self assessment of the problem identification and resolution area in that engineering personnel did not perform self assessments that were comprehensive, objective, and self critical (P.3.(a)). Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Six Examples of a Failure to Implement the Corrective Action Program Requirements Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion XVI, Corrective Action, with six examples for the failure of the licensee to identify, evaluate, or correct conditions adverse to quality between 1988 and October 10, 2007. The corrective actions implemented by the licensee to address the substantive human performance and problem identification and resolution crosscutting issues were ineffective in sustaining performance improvement as noted by licensee self assessments, external industry reviews, and NRC inspections. The team also identified several examples of poor and inconsistent implementation of corrective action program behaviors. The examples of the violation involved not entering the use of unqualified tape in containment in the corrective action process, evaluating the condition, or taking timely actions to remove the tape from all three units; not identifying, evaluating, or implementing timely corrective actions associated with operating experience applicable to the auxiliary feedwater pump trip and throttle valve; not implementing timely corrective actions for water intrusion and flooding of underground manholes and cable vaults; inadequate evaluation for nonconforming Target Rock reed switches; not evaluating and correcting a degraded condition with post accident monitoring instrument chart recorders, and not correcting a degraded/nonconforming condition associated with 3 inch Borg-Warner check valves. Each of the individual technical issues was entered into the licensees corrective action program. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding have crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area because the licensee failed to evaluate previous issues such that resolutions addressed all conditions affecting operability (P.1.(c)), (2) operating experience of the problem identification and resolution area in that engineering personnel failed to ensure implementation and institutionalization of operating experience through changes to station processes, procedures, equipment, and training programs (P.2.(b)), and (3) self assessment of the problem identification and resolution area in that the licensee did not follow their benchmarking and self assessment guide to ensure findings were evaluated in their corrective action program (P.3.(c)). The causes of the examples of this finding also related to the safety culture component of accountability in that workforce and management personnel failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Evaluate Performance Monitoring Criteria for the Auxiliary Feedwater System Green. The team identified a noncited violation of 10 CFR 50.65(a)(2) for the failure of maintenance rule and engineering personnel to demonstrate that the performance or condition of structures, systems, or components was being effectively controlled through appropriate preventive maintenance to ensure systems or components remained capable of performing their intended function. Specifically, between April and October 2007, an inadequate evaluation of maintenance rule performance criteria was performed and, even though the Unit 2 auxiliary feedwater

Train A had exceeded its maintenance rule 10 CFR 50.65(a)(2) performance criteria, no goal setting and monitoring was performed as required by 10 CFR 50.65(a)(1) of the maintenance rule. This issue was entered into the corrective action program as Palo Verde Action Request 3075907. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding has crosscutting aspects associated with self assessments of the problem identification and resolution area in that maintenance rule and engineering personnel failed to perform self assessments that were comprehensive, appropriately objective, and self-critical (P.3.(a)). The cause of this finding has crosscutting aspects associated with decision-making of the human performance area in that engineering personnel failed to make safety-significant or risk-significant decisions using a systematic process (H.1.(a)). The cause of this finding is also related to the safety culture component of accountability in that management did not reinforce safety standards and display behaviors that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 04, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Adequate Design Controls for Condensate Storage Tank Temperature Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," with for the failure to translate design basis requirements into procedures to ensure the plant is operated within its design basis. Specifically, between 1985 and October 2007, the maximum condensate storage tank temperature requirements did not include the effect of recirculated hot condensate water from the main condenser. The issue was entered into the corrective action program as 3073243. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with corrective action of the problem identification and resolution area in that engineering personnel did not assess conditions adverse to quality for impacts to the operability of safety related equipment (P.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow procedures for Temporary Shielding Installation Green. The team identified a noncited violation of Technical Specification 5.4.1.a for the failure of radiation protection personnel to follow procedures for installing temporary shielding at the 87 foot elevation of the auxiliary building west penetration room. Specifically, temporary shielding (Package A-87-10) was installed in direct contact and across the Train A low pressure safety injection pressure instrument sensing line. However, a piping stress analysis was not performed as required by Procedure 75RP-9RP25, Temporary Shielding, Revision 9. This issue was entered into the corrective action program as Palo Verde Action Requests 3071468 and 3072224. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of configuration control and affected the cornerstone objective to ensure the availability and capability of systems to respond to initiating events. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, this finding is determined to be of very low safety significance because the condition did not result in an actual loss of safety function, and did not screen as risk significant or contribute to external event initiated core

damage sequences since it did not involve a loss or degradation of equipment designed to mitigate a seismic event. This finding has crosscutting aspects associated with the work practices component of the human performance area because the licensee did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the shielding installation (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Installation of Fire Sprinklers Green. The team identified a noncited violation of License Condition 2.C(6) for the failure to install sprinkler heads in accordance with the fire protection program. Specifically, on October 2, 2007, the team identified several upright fire sprinkler heads in the auxiliary building that were incorrectly installed in a downward orientation. This issue was entered into the corrective action program as Palo Verde Action Request 3073824. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, Fire Protection SDP, because it was associated with the suppression element of defense-in-depth. Since the installed configuration of the sprinkler heads represented a low degradation of the fire suppression system, in accordance with Section 1.3.1, of Inspection Manual Chapter 0609, Appendix F, the issue was determined to have very low safety significance. Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: FIN Finding Failure to Install Emergency Lighting in Containment Prior to Work Commencement Green. The team identified a finding for the failure of maintenance personnel to install emergency lighting in containment in support of the refueling outage per repetitive maintenance work Order 2935399 and work Instruction WSL 24436. As a result, work began in the Unit 3 containment with no emergency lighting installed and no egress contingency plan for a loss of containment lighting. This issue was entered into the corrective action program as Palo Verde Action Request 3070783. This finding is considered more than minor because if left uncorrected, a failure to install emergency lighting could hamper emergency response activities in the containment or complicate emergency egress from the containment. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, Significance Determination Process Using Qualitative Criteria, the finding is determined to be of very low safety significance because emergency lighting was necessary for personnel safety and personnel were expected to carry flashlights when responding to events. The cause of the finding has crosscutting aspects associated with work control of the human performance area in that maintenance personnel failed to properly plan the emergency lighting installation work by incorporating contingencies in case the work was not completed in the appropriate timeframe (H.3.(a)). The cause of this finding is also related to the safety culture component of accountability in that management personnel failed to reinforce safety standards and display behavior that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Configuration Control of Pressurizer Instrument Condensing Pot Support Brackets Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of maintenance and engineering personnel to maintain proper configuration

of the support brackets for the pressurizer condensate pots in accordance with design drawings. Specifically, on October 2, 2007, the team identified that the support bracket U-bolts were not tight against the condensate pot piping, jam nuts were not installed on the U-bolts, and jacking bolts were not in full contact with the pressurizer vessel. The support brackets minimize lateral motion during a seismic event. This issue was entered into the corrective action program as Palo Verde Action Requests PVAR 3070805 and 3075704. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. This finding has crosscutting aspects associated with the work practices component of the human performance area because maintenance personnel did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the installation of the support bracket (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: Aug 17, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate procedure for safe shutdown from outside the control room Green. The team identified a noncited violation of License Conditions 2.C.(7), 2.F and 2.C.(6) for Units 1, 2, and 3, respectively. Specifically, procedures required by 10 CFR Part 50, Appendix R, Section III.G.3 and III.L.3 had deficiencies that might impact the ability to complete a number of time-critical steps required to safely shutdown the facility following a fire in the control room. This was because the licensee failed to provide a number of tools necessary to complete the procedure as written. The team determined that, although operators did not use the equipment during time-critical steps, the lack of tools could negatively impact the ability to accomplish subsequent time-critical steps. This deficiency was more than minor because the finding is associated with the Protection Against External Factors attribute of the Mitigating Systems Cornerstone since it could affect the the availability, reliability, and capability of systems that respond to a fire events to prevent undesirable consequences. Using the guidance of Manual Chapter 0609, Appendix F, Attachment 2, the deficiency was determined to have a low degradation rating because it involved a procedural deficiency that was compensated by operator experience/familiarity, and revised calculations demonstrated that there was sufficient time margin available to complete the actions. Based on this, the finding screened as having very low safety significance (Green) during a Phase 1 significance determination. This finding had cross-cutting aspects in the area of human performance because the licensee failed to ensure that personnel, equipment, procedures, and other resources were available and adequate to assure nuclear safety. Specifically, the licensee did not ensure that adequate emergency equipment was available to support procedure completion. (H.2(d)). Inspection Report# : 2007008 (pdf) Significance: Jun 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY DEGRADED STRUCTURAL SUPPORTS A self-revealing noncited violation of 10 CFR 50.65(a)(3) was identified for failure of the licensee to incorporate internal and external industry operating experience into preventative maintenance activities that could have prevented a maintenance rule functional failure of feedwater pump Turbine A, a high risk heat removal system. Specifically, prior to March 18, 2007, the licensee did not incorporate available operating experience into preventative maintenance instructions to inspect, clean, and verify acceptable equipment condition for the linear variable differential transmitter linkage assembly. Failure to inspect and clean the linear variable differential transmitter linkage assembly resulted in a broken linkage, due to binding, causing erratic cycling of the feedwater pump turbine control valves resulting in a manual trip of feedwater Pump A and reactor power cutback to 48 percent power. This issue was entered into the corrective action program as Condition Report/Disposition Request 2984713. The finding is greater than minor because it is associated with the initiating events cornerstone attribute of equipment performance and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and

challenge critical safety functions during shutdown and power operations. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheet, the finding is determined to have very low safety significance because the finding did not result in exceeding the Technical Specification limit for identified reactor coolant system leakage and did not affect other mitigation systems; the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and the finding did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of problem identification and resolution, associated with operating experience, since engineering personnel failed to account for prior operating experience in determining the maintenance rule scope and appropriate preventive maintenance for Valve 3JSCNUV0232 (P.2(b)). Inspection Report# : 2007003 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: FIN Finding Ineffective Demonstration of Conformance to Design for the Alternate ac Power Sources The team identified a finding involving the implementation of Regulatory Guide 1.155, Station Blackout, Appendix A, for the demonstration of the station backout generator design and system readiness requirements. Specifically, established preventive maintenance tasks did not demonstrate that the coping requirements for the station blackout generator would be met for the approved increase from the 4-hour to 16-hour coping duration that, at the time this finding was identified, would become effective the following month. The licensee has entered this finding into their corrective action program as Palo Verde Action Request PVAR 2982699. The finding is greater than minor because it would become a more significant safety concern if left uncorrected following the implementation of the 16-hour coping duration. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to adequately evaluate the design and system readiness requirements for the station blackout generators for the approved license amendment that, at the time the finding was identified, would, increase the coping period to 16-hours. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Control of Design Information for the Station Blackout System The team identified a noncited violation of very low safety significance for the failure to implement the design control requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 1, Design Control and Procurement Control, to 10 CFR 50.63, Loss of All Alternating Current. Specifically, approved Design Change DMWO 2827452 did not account for key station blackout generator performance parameters that included fuel and lubricating oil consumption rates and required station blackout battery capacity for an increase in the station blackout coping period from 4 to16-hours. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that the critical performance parameters for ensuring the station blackout generators would meet the 16-hour coping requirement were not established. The finding affected the mitigating systems cornerstone attributes to ensure the availability of the station blackout generators to respond to initiating events necessary to prevent undesirable consequences. Using the NRC Inspection Manual Chapter 0609, Significance Determination Process, Phase 1 Worksheet, the team determined that this finding had very low safety significance because there was not a loss of system function and it did not involve an external event. The cause of the finding was related to the crosscutting element of decision making associated with human performance for the failure to evaluate the key performance parameters for the station blackout generators for the approved license amendment that increased the coping period to 16-hours. (Section 1R21b.2.) Inspection Report# : 2007011 (pdf)

Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Non-conservative Containment Sump Level Analysis The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Appendix B, Criterion III, Design Control. Specifically, the design calculation that determined the minimum containment flood level following a loss-of-coolant accident was not based on the most limiting reactor coolant system break location. The calculated containment flood level was used to verify the adequacy of the available net positive suction head for the emergency core cooling pumps that would take suction from the containment sump during the recirculation phase of a postulated loss-of-coolant accident. The licensee has entered this issue into their corrective action program as Palo Verde Action Request PVAR 2981257. This finding is greater than minor because this issue required accident analysis calculations to be re-performed to assure the accident requirements were met. The finding affected the mitigating systems cornerstone as related to the availability, reliability, and capability of the emergency core cooling system for post-loss-of-cooling accident. In accordance with Inspection Manual Chapter 0609, Significance Determination Process, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations, the team conducted a Phase 1 screening and determined the finding was of very low safety significance because it did not represent an actual loss of safety function. This deficiency would not have resulted in the emergency core cooling pumps becoming inoperable under the most limiting postulated accident conditions. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: May 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Maintenance on Target Rock Solenoid-Operated Valves The team identified a noncited violation of very low safety significance of 10 CFR Part 50, Criterion XVI, Corrective Actions, for the failure to identify and correct significant conditions adverse to quality involving Target Rock valve failures. The licensee has entered this issue into their corrective action program as Palo Verde Nuclear Generating Station Action Requests PVAR 2984832 and 2985372. The failure to identify and correct the cause(s) of turbine-driven auxiliary feedwater pump Target Rock solenoid-operated valves was a performance deficiency. This issue is more than minor because it is associated separately with the mitigating systems cornerstone and on one occasion affected the containment barrier integrity cornerstone. This finding has cross-cutting aspects associated with corrective action of the problem identification and resolution area to ensure that issues potentially impacting nuclear safety are promptly identified, fully evaluated and that actions are taken to address safety issues in a timely manner. Inspection Report# : 2007011 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay.

The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, states, in part, that for significant conditions adverse to quality, measures shall assure that the cause of the condition is determined and corrective action taken to preclude repetition. Specifically, on July 26, 2006, the licensee failed to assure that the cause of a significant condition adverse to quality was determined and that corrective action was taken to preclude repetition. Specifically, the licensee did not identify and correct the cause of the erratic Unit 3, Train A Emergency Diesel Generator K-1 relay operation prior to installation of the relay on July 26, 2006. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of problem identification and resolution in that the failure to fully evaluate and implement adequate corrective maintenance actions for the Unit 3 Train A emergency diesel generator resulted in the emergency diesel generator being inoperable for 18 days. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns.

The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005.

{NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures Resulted in Water Transfer from the Spent Fuel Pool A self revealing non-cited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, on January 13, 2008, operations personnel failed to properly implement Procedure 40OP 9PC06, "Fuel Pool Cleanup and Transfer," Revision 41, for operating the pool cooling cleanup system, resulting in pool cooling cleanup Filter PCN F01B bypass Valve PCN V061 being improperly aligned. This resulted in the inadvertent transfer of 300 gallons of spent fuel pool water to the refueling water tank. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3121713. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because the finding did not result in loss of cooling to the spent fuel pool; the finding did not result from fuel handling errors that caused damage to the fuel clad integrity or a dropped assembly; and the finding did not result in a loss of spent fuel pool inventory greater than ten percent of the spent fuel pool volume. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee failed to use adequate human error prevention techniques, such as pre job briefings, to ensure that the pool cooling cleanup system activity was performed safely [H.4(a)]. Inspection Report# : 2008002 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation INADEQUAT DESIGN CONTROLS FOR REFUELING MACHINE The inspectors identified two examples of a noncited violation of 10 CFR Part 50, Criterion III, "Design Control," for the failure of engineering personnel to ensure that the design bases of the refueling machine were adequately translated into specifications, drawings, procedures, or instructions. Specifically, for the first example, between October 27, 2006, and October 25, 2007, the licensee inappropriately changed the facility as noted in the Updated Final Safety Analysis Report when a modification to the refueling machine introduced a single failure that could result in a failure of both the underload and overload protection features. This change resulted in more than a minimal increase in the consequences of a malfunction, in that the force limits on a fuel assembly grid strap could be exceeded. For the second example, between initial construction and December 5, 2007, procedures and instructions did not limit the stall torque of the hoist motor for the refueling machine. These issues were entered into the corrective action program as Condition Report/Disposition Requests 3030759 and 3068656. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that refueling equipment malfunctions could result in damaged fuel. Manual Chapter 0609, Appendix M, "Significance Determination Process Using Qualitative Criteria," was used since the Significance Determination Process methods and tools were not adequate to determine the significance of the finding. This finding affects the barrier integrity cornerstone and is determined to have very low safety significance by NRC management review because it was a

deficiency that did not result in the actual degradation of fuel. Inspection Report# : 2007005 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Incorrect Rigging of Personal Airlock Door Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of maintenance personnel to properly rig the Unit 3 100 foot elevation inner personnel airlock door in accordance with engineering drawings. Specifically, the suspended rigging was completed with the inappropriate placement of wire rope slings over two locking pins resulting in an unanalyzed force being applied to the doors operating mechanism. This issue was entered into the corrective action program as Palo Verde Action Request 3086057. The finding is greater than minor because it could become a more significant safety concern if left uncorrected in that the applied suspended force on the bronze bushing and the doors operating mechanism, which were not designed for vertical loading, could degrade the personnel airlock door sealing capability. This finding can not be evaluated by the significance determination process because Inspection Manual Chapter 0609, "Significance Determination Process," Appendix A, "Determining the Significance of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," does not apply to the PAL door for the plant conditions that existed during the event. This finding affects the barrier integrity cornerstone and is determined to be of very low safety significance by NRC management review using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, "Significance Determination Process Using Qualitative Criteria," because it was a deficiency that did not result in the actual breach of the containment barrier. The cause of this finding has crosscutting aspects associated with the work practices aspect of the human performance area in that maintenance personnel failed to provide adequate oversight of work activities (H.4.(c)). Inspection Report# : 2007012 (pdf) Significance: Sep 27, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Meet Technical Specification Surveillance Requirement 3.6.6.6 Green. The team identified a noncited violation of Technical Specification Surveillance Requirement 3.6.6.6, for the failure to verify that each containment spray nozzle was unobstructed. Specifically, the last completed surveillance test conducted on each unit, identified that one nozzle in each unit was obstructed and that the nozzles were not retested in accordance with the approved retest requirement. This issue was entered into the corrective action program as Palo Verde Action Requests 3075026, 3075059, 3068647 and, 3048511. The finding is more than minor because it affected the configuration control attribute of the barrier integrity cornerstone, and affected the associated cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to be of very low safety significance because it did not involve an actual reduction in defense-in-depth for the atmospheric pressure control function of the reactor containment. Inspection Report# : 2007012 (pdf) Emergency Preparedness Significance: TBD Oct 28, 2007 Identified By: NRC Item Type: AV Apparent Violation Failure to Correct a Risk Significant Planning Standard

TBD. The team identified an apparent violation of 10 CFR 50.54(q) and Appendix E IV.F.2.g, with the significance yet to be determined, for the licensees failure to correct an identified risk significant planning standard weakness between May 2, 2007 and October 28, 2007. Specifically, the licensee failed to implement adequate corrective actions for identified weaknesses in the ability to correctly make a Site Area Emergency declaration for a steam generator tube rupture event. This issue was entered into the licensees correction action program as Palo Verde Action Request 3083911. The team determined that the inability to consistently implement an EAL was a performance deficiency within the licensees control. This finding more than minor because it was associated with the Emergency Preparedness attribute of emergency response organization performance and affected the cornerstone objective to implement adequate measures to protect the health and safety of the public because the inability to properly recognize and classify an emergency condition affects the licensees ability to implement adequate protective measures. This finding was evaluated using the Emergency Preparedness SDP and was preliminarily determined to be of low to moderate safety significance because it was a failure to comply with NRC requirements; it was an issue associated with the requirements of Appendix E of 10 CFR Part 50; it was not an issue with a risk significant planning standard as described in Manual Chapter 0609, Appendix B, Section 2.0; and it was a functional failure of the requirements of Appendix E IV.F.2.g because the licensee failed to correct a weakness associated with Risk Significant Planning Standard 10 CFR 50.47(b)(4). The cause of this finding has crosscutting aspects associated with the corrective action aspect of the problem identification and resolution area in that the licensee failed to thoroughly evaluate problems such that resolutions ensured correcting problems (P.1.(c)). The cause of this finding was also related to the safety culture component of accountability in that the licensee failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 08, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inability to Implement Two Emergency Action Levels Green. The team identified a Green noncited violation of 10 CFR 50.54(q) and §50.47(b)(4), for the failure of the licensee to be able to implement EAL 3-12 and EAL7-1. Specifically, area radiation Monitor RU-18 could not be utilized in the vicinity of the remote shutdown panels and therefore, the emergency classification could not be declared at the Alert level as required in Procedure EPIP-99. In addition, the licensee improperly overclassified EAL 7-1 as an Alert when presented conditions warranting a classification of a Notification of Unusual Event. Specifically, the licensee did not develop a procedure to enable personnel to differentiate between an aircraft and an airliner and therefore, the proper emergency classifications could not be consistently determined. This finding was entered into the licensees corrective action program as Condition Report Disposition Requests 3071570, 3071572, and 3085175. The team determined that the inability to implement EALs was a performance deficiency. The finding was more than minor because it was associated with the Emergency Preparedness attribute of procedure quality and could affect the cornerstone objective associated with the licensees ability to correctly classify an emergency condition which would affect the licensees ability to implement adequate measures to protect the health and safety of the public. Using the Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness SDP, the finding was determined to have very low safety significance because the licensee would be unable to declare one EAL at the Alert and one EAL at the Notification of Unusual Event level. The cause of this finding had crosscutting aspects associated with the corrective action of the PI&R area in that the licensee had previous opportunities to identify the deficiencies (P.1.(a)). Inspection Report# : 2007012 (pdf) Significance: Sep 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY AND CRITIQUE AN EVENT CLASSIFICATION WEAKNESS The inspectors identified a noncited violation of 10 CFR 50.54(q) for failure of the emergency planning organization's emergency exercise critique process to identify for correction an emergency plan weakness associated with a risk significant planning standard. Specifically, during the critique of the Emergency Preparedness portion of the August

22, 2007, Force-On-Force exercise, the licensee failed to identify for correction an event classification weakness. The weakness occurred during the exercise when the shift manager did not recognize a credible security threat notification was made to the facility. As a result, the shift manager did not declare a Notice of Unusual Event as required by EPIP-99, Appendix A, "Emergency Actions Levels - EAL 7-1." This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3056153. This finding is greater than minor because it is associated with the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and affects the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. In accordance with Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness Significance Determination Process, this finding is determined to have very low safety significance because, although it was a failure to comply with NRC requirements, it did not involve the risk-significant aspects of a planning standard as defined in Manual Chapter 0609, Appendix B, Section 2.0; and was not a planning standard functional failure because the critique failure occurred in a small scale drill with limited emergency response organization participation and evaluation. This finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective action program because the threshold for identifying issues was not sufficiently low. Specifically, the emergency planning evaluator did not recognize the shift manager's failure to make the Notice of Unusual Event classification during the Force-On-Force exercise. Therefore, the exercise critique did not identify and correct the event classification deficiency as required (P.1(a)). Inspection Report# : 2007004 (pdf) Occupational Radiation Safety Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO EVALUATE THE RADIOLOGICAL HAZARD CAUSED BY DECONTAMINATION The inspectors identified a noncited violation of 10 CFR 20.1501(a) because the licensee failed to completely evaluate the radiological hazard associated with the decontamination of the temporary reactor head. This failure lead to internal exposure of two workers and personnel contamination of two other nearby individuals. The original apparent cause evaluation determined that the radiation protection technicians' decision not to rinse the underside of the temporary reactor head caused the uptakes and contaminations. Upon NRC documentation review and interviews with staff, the licensee determined that the total effective dose equivalent ALARA evaluation of the radiological conditions and appropriate protective equipment required did not fully evaluate the job site conditions or process of decontamination of the temporary reactor head. The issue was entered into the corrective action program as Condition Report/Disposition Request 3046953. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that not completely evaluating the radiological conditions had the potential to increase personnel dose. This occurrence involved individual worker unplanned, unintended dose that resulted from actions or conditions contrary to licensee procedures, radiation work permit, and technical specifications, therefore this finding was evaluated using the Occupational Radiation Safety Significance Determination Process. The inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue, (2) an overexposure, (3) a substantial potential for overexposure, or (4) an impaired ability to assess dose. This finding also has a crosscutting aspect in the area of human performance, work control component, because the work planning did not consider possible risk insights and job sight conditions. Inspection Report# : 2007005 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURAL GUIDANCE AND RADIATION WORK INSTRUCTIONS The inspectors identified a noncited violation of Technical Specification 5.4.1 resulting from a failure to follow

radiation exposure permit instructions. Specifically, while touring the Unit 3 containment on October 23, 2007, the inspectors questioned six individuals at the pressurizer cubicle on the 120' level. The individuals stated they left their job site and proceeded to a new job site without informing radiation protection and receiving a radiological brief of the conditions at the new job site. The workers were coached by the licensee and the issue was entered into the corrective action program as Palo Verde Action Request 3081935. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that the non compliance to a radiation exposure permit instructions had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue; (2) an overexposure; (3) a substantial potential for overexposure; or (4) an impaired ability to assess dose. This finding involved crosscutting in the area of human performance, work practices component, in that the workers did not use human error prevention techniques such as adequate self and peer checking to appropriately evaluate work conditions. Inspection Report# : 2007005 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Briefings of Radiological Conditions Green. The team identified a noncited violation of 10 CFR 19.12, Instructions to Workers, for the failure of radiation protection personnel to provide adequate information regarding radiological conditions and precautions to minimize exposure during pre-job briefs. Specifically, on October 1 and 3, 2007, radiation protection personnel did not adequately inform workers of radiological conditions and precautions to minimize exposure during radiological briefings. This issue was entered into the corrective action program as Palo Verde Action Request 3070507 and 3071940. The finding is greater than minor because if left uncorrected it would become a more significant safety concern in that the failure to inform workers of radiological conditions could result in unintended exposures. The finding affected the occupational radiation safety cornerstone and is determined to be of very low safety significance because it was not an as low as is reasonably achievable issue, there was not an overexposure or substantial potential for an overexposure, and the ability to assess dose was not compromised. The cause of this finding has crosscutting aspects associated with decision making in the human performance area in that radiation protection personnel failed to communicate decisions, and the basis for decisions, to personnel who had a need to know the information (H.1.(c)). This finding also has a safety culture component aspect of accountability in that radiation protection personnel did not demonstrate a proper safety focus or reinforce safety principles among peers when conducting pre-job briefings (O.1.(c)). Inspection Report# : 2007012 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : June 05, 2008

Palo Verde 3 2Q/2008 Plant Inspection Findings Initiating Events Significance: Nov 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Implementation of Risk Management Actions and Risk Assessments for the Switchyard Green. The team identified a noncited violation of 10 CFR 50.65(a)(4) for the failure to adequately assess the increase in risk and effectively implement risk mitigation actions for maintenance activities in the switchyard. Specifically, the switchyard was not being protected by controlling access and movement as required and the risk modeling did not include all work being performed. The Unit 1 shift manager and the switchyard coordinator were unaware of the movement of multiple vehicles and pieces of equipment in or near restricted areas and not all maintenance was included in the schedule provided to the switchyard coordinator for risk review. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3078392. This finding is greater than minor because the licensees risk assessment failed to consider maintenance activities that could increase the likelihood of initiating events such as work in the switchyard and failed to effectively manage compensatory measures. Inspection Manual Chapter 0609, Significance Determination Process, Appendix K, Maintenance Risk Assessment and Risk Management Significance Determination Process, was used to assess the significance. Using data from the licensees probabilistic risk assessment, a NRC Region IV senior reactor analyst calculated the risk deficit. Based on the magnitude of the calculated risk deficit being less than 1E-6/year, this finding is determined to be of very low safety significance. The cause of this finding has crosscutting aspects associated with work control of the human performance area in that the licensee did not appropriately coordinate switchyard activities incorporating risk insights (H.3.(a)) and did not communicate with each other during activities in which coordination is necessary to assure plant and human performance (H.3.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to maintain Control of Transient Combustibles Green. The team identified a noncited violation of Technical Specification 5.4.1.d for the failure of fire protection personnel to follow Procedure 14DP-0FP33, "Control of Transient Combustibles," Revision 15. Specifically, the team identified that on the 70 elevation of the Auxiliary Building (Radiation Protection Remote Monitoring Station) and in the Unit 3 containment, there were transient combustibles being stored without the proper evaluation and required permits. This issue was entered into the corrective action program as Palo Verde Action Request 3071785. The finding is considered more than minor because storing unanalyzed material could result in the potential to exceed combustible limits and is associated with an increase in the likelihood of an initiating event. Using Inspection Manual Chapter 0609, Significance Determination Process, Appendix F, Fire Protection Significance Determination Process," this issue affected the Fire Prevention and Administrative Controls Category. In this case the stored materials required a permit per the licensees procedure; however, the area was attended, fire detection and suppression was available, and the amounts did not exceed the loading calculation to the point of changing the loading classification. Therefore, this finding is considered of Low Degradation and had very low safety significance. The cause of this finding has crosscutting aspects associated with work practices in the human performance area because (1) the licensee failed to communicate human error prevention techniques such that work activities were performed safely (H.4.(a)), and (2) the licensee did not effectively communicate expectations regarding procedural compliance (H.4.(b)). The cause of this finding is also related to the safety culture component of accountability in that fire protection personnel failed to demonstrate a proper safety focus and reinforce safety principles among their peers (O.1.(c)).

Inspection Report# : 2007012 (pdf) Mitigating Systems Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish Preventative Maintenance Procedures for Emergency Diesel Generator Fuel Oil Injection Pump O-Rings The inspectors identified a non-cited violation of Technical Specification 5.4.1.a for the failure of operations and engineering personnel to establish and implement maintenance procedures for inspection and replacement of items that have a specific lifetime. Specifically, between February 12, 2007 and March 7, 2008, operations and engineering personnel failed to inspect or replace the emergency diesel generators fuel oil injection pump upper O-rings prior to the end of their service life resulting in fuel leakage and increased unavailability and unreliability of Unit 1 Train A, Unit 2 Train B, and Unit 3 Train B emergency diesel generators. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3143422. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because the licensee failed to use available operating experience, including vendor recommendations, to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to Properly Implement the Systematic Troubleshooting Process The inspectors identified two examples of a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of operations, engineering, and maintenance personnel to follow procedures for troubleshooting failures of safety related components. Specifically, between January 8 and January 13, 2008, operations, engineering, and maintenance personnel failed to incorporate the adequate level of detail into their troubleshooting plans for the Unit 3 auxiliary feedwater trip and throttle Valve AFA HV 0054 when it failed to fully close upon demand from the control room hand switch, and for the Unit 3 log power Channel A when induced noise was present. These issues were entered into the licensee's corrective action program as Palo Verde Action Requests 3120075 and 3118744. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. Both examples have a crosscutting aspect in the area of human performance associated with decision making because the licensee did not obtain appropriate interdisciplinary input and reviews on safety significant or risk significant decisions [H.1(a)].

Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Adequate Staffing Levels Results in Heavy Use of Overtime to Maintain Adequate Shift Coverage The inspectors identified a non-cited violation of Technical Specification 5.2.2.d involving the routine use of excessive overtime for operations personnel that performed safety-related functions. Specifically, between January 1 and December 31, 2007, operations personnel routinely used excessive overtime. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3112231. The finding is greater than minor because if left uncorrected the finding would become a more significant safety concern in that the routine use of excessive work hours increases the likelihood of operator errors. Using the IMC 0609, "Significance Determination Process," Appendix M, the finding is determined to have very low safety significance because there was no recent instances where findings of low to moderate (White) or greater significance were attributed to the increased use of overtime by operating personnel. The finding has a crosscutting aspect in the area of human performance associated with resources because the licensee failed to maintain sufficient qualified operations personnel to maintain working hours within guidelines without the excessive use of overtime [H.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Class 1E 125 V DC System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to ensure that potentially nonconforming conditions associated with the Class 1E 125 Vdc system were reviewed for operability. Specifically, between September 29, 2007 and March 7, 2008, engineering personnel failed to ensure all relevant information was reviewed for operability when it was determined that vendor recommended preventative maintenance tasks were not being performed on the Class 1E 125 Vdc system. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3144707. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because safety significant decisions were not verified to validate underlying assumptions and identify unintended consequences [H.1(b)]. Inspection Report# : 2008002 (pdf) Significance: Oct 26, 2007 Identified By: NRC Item Type: NCV NonCited Violation Eight Examples of the Failure to Implement the operability Determination Process Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," with eight examples for the failure of the licensee to adequately evaluate degraded and unanalyzed conditions to support operability decision making between May 2006 and October 26, 2007. The team noted a significant number of weak or non-existent operability evaluations of degraded conditions affecting safety-related equipment. There was a lack of understanding of the need to assess operability for some conditions adverse to

quality and a lack of knowledge or skills necessary to conduct quality operability assessments. The examples of the violation involved two instances of conditions adverse to quality documented in databases outside of the corrective action program, missile hazards near the essential spray pond, two issues effecting essential cooling water system heat exchangers, 480V and 4160V motor terminations, oil leaks on the emergency diesel generators, and high lead content in a Unit 3 low pressure safety injection pump. Each of the individual technical issues was entered into the licensees corrective action program. These examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel (1) did not make safety significant decisions using a systematic process (H.1.(a)), and (2) failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding also have crosscutting aspects associated with evaluation and corrective action of the problem identification and resolution area in that licensee personnel (1) did not assess conditions adverse to quality for impacts to the operability of safety- related equipment (P.1.(c), and (2) did not address safety issues in a timely manner P.1.(d)). The causes of the examples of this finding also related to the safety culture component of accountability in that workers and managers failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish maintenance Rule Goals for the Safety Injection System Green. The team identified a noncited violation of 10 CFR 50.65, for the failure of engineering personnel to establish goals and monitor the performance of the safety injection system. Specifically, on March 22, 2007, engineering personnel failed to establish goals to properly monitor system performance, or provide a technical justification to demonstrate that monitoring under 10 CFR 50.65(a)(1) was not required for the safety injection system following the system changing status from 10 CFR 50.65(a)(2) to 10 CFR 50.65(a)(1). This issue was entered into the corrective action program as Palo Verde Action Requests 3074255 and 3076699. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significant Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since there was no loss of safety function. The cause of this finding has crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area in that engineering personnel failed to take appropriate actions to address safety issues and adverse trends in a timely manner (P.1.(d)) and self assessment of the problem identification and resolution area in that engineering personnel did not perform self assessments that were comprehensive, objective, and self critical (P.3.(a)). Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Six Examples of a Failure to Implement the Corrective Action Program Requirements Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion XVI, Corrective Action, with six examples for the failure of the licensee to identify, evaluate, or correct conditions adverse to quality between 1988 and October 10, 2007. The corrective actions implemented by the licensee to address the substantive human performance and problem identification and resolution crosscutting issues were ineffective in sustaining performance improvement as noted by licensee self assessments, external industry reviews, and NRC inspections. The team also

identified several examples of poor and inconsistent implementation of corrective action program behaviors. The examples of the violation involved not entering the use of unqualified tape in containment in the corrective action process, evaluating the condition, or taking timely actions to remove the tape from all three units; not identifying, evaluating, or implementing timely corrective actions associated with operating experience applicable to the auxiliary feedwater pump trip and throttle valve; not implementing timely corrective actions for water intrusion and flooding of underground manholes and cable vaults; inadequate evaluation for nonconforming Target Rock reed switches; not evaluating and correcting a degraded condition with post accident monitoring instrument chart recorders, and not correcting a degraded/nonconforming condition associated with 3 inch Borg-Warner check valves. Each of the individual technical issues was entered into the licensees corrective action program. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding have crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area because the licensee failed to evaluate previous issues such that resolutions addressed all conditions affecting operability (P.1.(c)), (2) operating experience of the problem identification and resolution area in that engineering personnel failed to ensure implementation and institutionalization of operating experience through changes to station processes, procedures, equipment, and training programs (P.2.(b)), and (3) self assessment of the problem identification and resolution area in that the licensee did not follow their benchmarking and self assessment guide to ensure findings were evaluated in their corrective action program (P.3.(c)). The causes of the examples of this finding also related to the safety culture component of accountability in that workforce and management personnel failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Evaluate Performance Monitoring Criteria for the Auxiliary Feedwater System Green. The team identified a noncited violation of 10 CFR 50.65(a)(2) for the failure of maintenance rule and engineering personnel to demonstrate that the performance or condition of structures, systems, or components was being effectively controlled through appropriate preventive maintenance to ensure systems or components remained capable of performing their intended function. Specifically, between April and October 2007, an inadequate evaluation of maintenance rule performance criteria was performed and, even though the Unit 2 auxiliary feedwater Train A had exceeded its maintenance rule 10 CFR 50.65(a)(2) performance criteria, no goal setting and monitoring was performed as required by 10 CFR 50.65(a)(1) of the maintenance rule. This issue was entered into the corrective action program as Palo Verde Action Request 3075907. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding has crosscutting aspects associated with self assessments of the problem identification and resolution area in that maintenance rule and engineering personnel failed to perform self assessments that were comprehensive, appropriately objective, and self-critical (P.3.(a)). The cause of this finding has crosscutting aspects associated with decision-making of the human performance area in that engineering personnel failed to make safety-significant or risk-significant decisions using a systematic process (H.1.(a)). The cause of this finding is also related to the safety culture component of accountability in that management did not reinforce safety standards and display behaviors that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf)

Significance: Oct 04, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Adequate Design Controls for Condensate Storage Tank Temperature Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," with for the failure to translate design basis requirements into procedures to ensure the plant is operated within its design basis. Specifically, between 1985 and October 2007, the maximum condensate storage tank temperature requirements did not include the effect of recirculated hot condensate water from the main condenser. The issue was entered into the corrective action program as 3073243. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with corrective action of the problem identification and resolution area in that engineering personnel did not assess conditions adverse to quality for impacts to the operability of safety related equipment (P.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow procedures for Temporary Shielding Installation Green. The team identified a noncited violation of Technical Specification 5.4.1.a for the failure of radiation protection personnel to follow procedures for installing temporary shielding at the 87 foot elevation of the auxiliary building west penetration room. Specifically, temporary shielding (Package A-87-10) was installed in direct contact and across the Train A low pressure safety injection pressure instrument sensing line. However, a piping stress analysis was not performed as required by Procedure 75RP-9RP25, Temporary Shielding, Revision 9. This issue was entered into the corrective action program as Palo Verde Action Requests 3071468 and 3072224. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of configuration control and affected the cornerstone objective to ensure the availability and capability of systems to respond to initiating events. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, this finding is determined to be of very low safety significance because the condition did not result in an actual loss of safety function, and did not screen as risk significant or contribute to external event initiated core damage sequences since it did not involve a loss or degradation of equipment designed to mitigate a seismic event. This finding has crosscutting aspects associated with the work practices component of the human performance area because the licensee did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the shielding installation (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Installation of Fire Sprinklers Green. The team identified a noncited violation of License Condition 2.C(6) for the failure to install sprinkler heads in accordance with the fire protection program. Specifically, on October 2, 2007, the team identified several upright fire sprinkler heads in the auxiliary building that were incorrectly installed in a downward orientation. This issue was entered into the corrective action program as Palo Verde Action Request 3073824. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that

respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, Fire Protection SDP, because it was associated with the suppression element of defense-in-depth. Since the installed configuration of the sprinkler heads represented a low degradation of the fire suppression system, in accordance with Section 1.3.1, of Inspection Manual Chapter 0609, Appendix F, the issue was determined to have very low safety significance. Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: FIN Finding Failure to Install Emergency Lighting in Containment Prior to Work Commencement Green. The team identified a finding for the failure of maintenance personnel to install emergency lighting in containment in support of the refueling outage per repetitive maintenance work Order 2935399 and work Instruction WSL 24436. As a result, work began in the Unit 3 containment with no emergency lighting installed and no egress contingency plan for a loss of containment lighting. This issue was entered into the corrective action program as Palo Verde Action Request 3070783. This finding is considered more than minor because if left uncorrected, a failure to install emergency lighting could hamper emergency response activities in the containment or complicate emergency egress from the containment. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, Significance Determination Process Using Qualitative Criteria, the finding is determined to be of very low safety significance because emergency lighting was necessary for personnel safety and personnel were expected to carry flashlights when responding to events. The cause of the finding has crosscutting aspects associated with work control of the human performance area in that maintenance personnel failed to properly plan the emergency lighting installation work by incorporating contingencies in case the work was not completed in the appropriate timeframe (H.3.(a)). The cause of this finding is also related to the safety culture component of accountability in that management personnel failed to reinforce safety standards and display behavior that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Configuration Control of Pressurizer Instrument Condensing Pot Support Brackets Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of maintenance and engineering personnel to maintain proper configuration of the support brackets for the pressurizer condensate pots in accordance with design drawings. Specifically, on October 2, 2007, the team identified that the support bracket U-bolts were not tight against the condensate pot piping, jam nuts were not installed on the U-bolts, and jacking bolts were not in full contact with the pressurizer vessel. The support brackets minimize lateral motion during a seismic event. This issue was entered into the corrective action program as Palo Verde Action Requests PVAR 3070805 and 3075704. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. This finding has crosscutting aspects associated with the work practices component of the human performance area because maintenance personnel did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the installation of the support bracket (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: Aug 17, 2007

Identified By: NRC Item Type: NCV NonCited Violation Inadequate procedure for safe shutdown from outside the control room Green. The team identified a noncited violation of License Conditions 2.C.(7), 2.F and 2.C.(6) for Units 1, 2, and 3, respectively. Specifically, procedures required by 10 CFR Part 50, Appendix R, Section III.G.3 and III.L.3 had deficiencies that might impact the ability to complete a number of time-critical steps required to safely shutdown the facility following a fire in the control room. This was because the licensee failed to provide a number of tools necessary to complete the procedure as written. The team determined that, although operators did not use the equipment during time-critical steps, the lack of tools could negatively impact the ability to accomplish subsequent time-critical steps. This deficiency was more than minor because the finding is associated with the Protection Against External Factors attribute of the Mitigating Systems Cornerstone since it could affect the the availability, reliability, and capability of systems that respond to a fire events to prevent undesirable consequences. Using the guidance of Manual Chapter 0609, Appendix F, Attachment 2, the deficiency was determined to have a low degradation rating because it involved a procedural deficiency that was compensated by operator experience/familiarity, and revised calculations demonstrated that there was sufficient time margin available to complete the actions. Based on this, the finding screened as having very low safety significance (Green) during a Phase 1 significance determination. This finding had cross-cutting aspects in the area of human performance because the licensee failed to ensure that personnel, equipment, procedures, and other resources were available and adequate to assure nuclear safety. Specifically, the licensee did not ensure that adequate emergency equipment was available to support procedure completion. (H.2(d)). Inspection Report# : 2007008 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO ESTABLISH APPROPRIATE INSTRUCTIONS The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, states, in part, that activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between July 25 and September 22, 2006, activities affecting quality were not prescribed by documented instructions appropriate to the circumstances. Specifically, the licensee failed to develop appropriate instructions or procedures for corrective maintenance activities on the Unit 3, Train A Emergency Diesel Generator K-1 relay. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of human performance associated with resources in that the licensee failed to develop and implement appropriate work instructions prior to performing corrective maintenance activities on an emergency diesel generator K-1 relay. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: Nov 30, 2006 Identified By: NRC Item Type: VIO Violation FAILURE TO IDENTIFY AND CORRECT A CONDITION ADVERSE TO QUALITY The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, states, in part, that for significant conditions adverse to quality, measures shall assure that the cause of the condition is determined and corrective action taken to preclude repetition. Specifically, on July 26, 2006, the licensee failed to assure that the cause of a significant condition adverse to quality was determined and that corrective action was taken to preclude repetition. Specifically, the licensee did not identify and correct the cause of the erratic Unit 3, Train A

Emergency Diesel Generator K-1 relay operation prior to installation of the relay on July 26, 2006. This resulted in the emergency diesel generator being inoperable between September 4 and September 22, 2006. The cause of this finding is related to the crosscutting element of problem identification and resolution in that the failure to fully evaluate and implement adequate corrective maintenance actions for the Unit 3 Train A emergency diesel generator resulted in the emergency diesel generator being inoperable for 18 days. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that it is an issue with low to moderate safety significance. After considering the information developed during the inspection, the NRC has concluded that the inspection finding is appropriately characterized as White (i.e., an issue with low to moderate increased importance to safety). On February 21, 2007, a final significance determination letter was issued which characterized VIO 050000530/2006012-01 and VIO 050000530/2006012-02 as a single White SDP finding. These violations will be inspected within the scope of a supplemental 95001 inspection Inspection Report# : 2006012 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES

The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures Resulted in Water Transfer from the Spent Fuel Pool A self revealing non-cited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, on January 13, 2008, operations personnel failed to properly implement

Procedure 40OP 9PC06, "Fuel Pool Cleanup and Transfer," Revision 41, for operating the pool cooling cleanup system, resulting in pool cooling cleanup Filter PCN F01B bypass Valve PCN V061 being improperly aligned. This resulted in the inadvertent transfer of 300 gallons of spent fuel pool water to the refueling water tank. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3121713. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because the finding did not result in loss of cooling to the spent fuel pool; the finding did not result from fuel handling errors that caused damage to the fuel clad integrity or a dropped assembly; and the finding did not result in a loss of spent fuel pool inventory greater than ten percent of the spent fuel pool volume. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee failed to use adequate human error prevention techniques, such as pre job briefings, to ensure that the pool cooling cleanup system activity was performed safely [H.4(a)]. Inspection Report# : 2008002 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation INADEQUAT DESIGN CONTROLS FOR REFUELING MACHINE The inspectors identified two examples of a noncited violation of 10 CFR Part 50, Criterion III, "Design Control," for the failure of engineering personnel to ensure that the design bases of the refueling machine were adequately translated into specifications, drawings, procedures, or instructions. Specifically, for the first example, between October 27, 2006, and October 25, 2007, the licensee inappropriately changed the facility as noted in the Updated Final Safety Analysis Report when a modification to the refueling machine introduced a single failure that could result in a failure of both the underload and overload protection features. This change resulted in more than a minimal increase in the consequences of a malfunction, in that the force limits on a fuel assembly grid strap could be exceeded. For the second example, between initial construction and December 5, 2007, procedures and instructions did not limit the stall torque of the hoist motor for the refueling machine. These issues were entered into the corrective action program as Condition Report/Disposition Requests 3030759 and 3068656. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that refueling equipment malfunctions could result in damaged fuel. Manual Chapter 0609, Appendix M, "Significance Determination Process Using Qualitative Criteria," was used since the Significance Determination Process methods and tools were not adequate to determine the significance of the finding. This finding affects the barrier integrity cornerstone and is determined to have very low safety significance by NRC management review because it was a deficiency that did not result in the actual degradation of fuel. Inspection Report# : 2007005 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Incorrect Rigging of Personal Airlock Door Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of maintenance personnel to properly rig the Unit 3 100 foot elevation inner personnel airlock door in accordance with engineering drawings. Specifically, the suspended rigging was completed with the inappropriate placement of wire rope slings over two locking pins resulting in an unanalyzed force being applied to the doors operating mechanism. This issue was entered into the corrective action program as Palo Verde Action Request 3086057. The finding is greater than minor because it could become a more significant safety concern if left uncorrected in that the applied suspended force on the bronze bushing and the doors operating mechanism, which were not designed for vertical loading, could degrade the personnel airlock door sealing capability. This finding can not be evaluated by the significance determination process because Inspection Manual Chapter 0609, "Significance Determination Process," Appendix A, "Determining the Significance of Reactor Inspection Findings for At-Power Situations," and Appendix

G, "Shutdown Operations Significance Determination Process," does not apply to the PAL door for the plant conditions that existed during the event. This finding affects the barrier integrity cornerstone and is determined to be of very low safety significance by NRC management review using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, "Significance Determination Process Using Qualitative Criteria," because it was a deficiency that did not result in the actual breach of the containment barrier. The cause of this finding has crosscutting aspects associated with the work practices aspect of the human performance area in that maintenance personnel failed to provide adequate oversight of work activities (H.4.(c)). Inspection Report# : 2007012 (pdf) Significance: Sep 27, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Meet Technical Specification Surveillance Requirement 3.6.6.6 Green. The team identified a noncited violation of Technical Specification Surveillance Requirement 3.6.6.6, for the failure to verify that each containment spray nozzle was unobstructed. Specifically, the last completed surveillance test conducted on each unit, identified that one nozzle in each unit was obstructed and that the nozzles were not retested in accordance with the approved retest requirement. This issue was entered into the corrective action program as Palo Verde Action Requests 3075026, 3075059, 3068647 and, 3048511. The finding is more than minor because it affected the configuration control attribute of the barrier integrity cornerstone, and affected the associated cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to be of very low safety significance because it did not involve an actual reduction in defense-in-depth for the atmospheric pressure control function of the reactor containment. Inspection Report# : 2007012 (pdf) Emergency Preparedness Significance: Oct 08, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inability to Implement Two Emergency Action Levels Green. The team identified a Green noncited violation of 10 CFR 50.54(q) and §50.47(b)(4), for the failure of the licensee to be able to implement EAL 3-12 and EAL7-1. Specifically, area radiation Monitor RU-18 could not be utilized in the vicinity of the remote shutdown panels and therefore, the emergency classification could not be declared at the Alert level as required in Procedure EPIP-99. In addition, the licensee improperly overclassified EAL 7-1 as an Alert when presented conditions warranting a classification of a Notification of Unusual Event. Specifically, the licensee did not develop a procedure to enable personnel to differentiate between an aircraft and an airliner and therefore, the proper emergency classifications could not be consistently determined. This finding was entered into the licensees corrective action program as Condition Report Disposition Requests 3071570, 3071572, and 3085175. The team determined that the inability to implement EALs was a performance deficiency. The finding was more than minor because it was associated with the Emergency Preparedness attribute of procedure quality and could affect the cornerstone objective associated with the licensees ability to correctly classify an emergency condition which would affect the licensees ability to implement adequate measures to protect the health and safety of the public. Using the Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness SDP, the finding was determined to have very low safety significance because the licensee would be unable to declare one EAL at the Alert and one EAL at the Notification of Unusual Event level. The cause of this finding had crosscutting aspects associated with the corrective action of the PI&R area in that the licensee had previous opportunities to identify the deficiencies (P.1.(a)).

Inspection Report# : 2007012 (pdf) Significance: Sep 30, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO IDENTIFY AND CRITIQUE AN EVENT CLASSIFICATION WEAKNESS The inspectors identified a noncited violation of 10 CFR 50.54(q) for failure of the emergency planning organization's emergency exercise critique process to identify for correction an emergency plan weakness associated with a risk significant planning standard. Specifically, during the critique of the Emergency Preparedness portion of the August 22, 2007, Force-On-Force exercise, the licensee failed to identify for correction an event classification weakness. The weakness occurred during the exercise when the shift manager did not recognize a credible security threat notification was made to the facility. As a result, the shift manager did not declare a Notice of Unusual Event as required by EPIP-99, Appendix A, "Emergency Actions Levels - EAL 7-1." This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3056153. This finding is greater than minor because it is associated with the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and affects the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. In accordance with Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness Significance Determination Process, this finding is determined to have very low safety significance because, although it was a failure to comply with NRC requirements, it did not involve the risk-significant aspects of a planning standard as defined in Manual Chapter 0609, Appendix B, Section 2.0; and was not a planning standard functional failure because the critique failure occurred in a small scale drill with limited emergency response organization participation and evaluation. This finding has a crosscutting aspect in the area of problem identification and resolution associated with corrective action program because the threshold for identifying issues was not sufficiently low. Specifically, the emergency planning evaluator did not recognize the shift manager's failure to make the Notice of Unusual Event classification during the Force-On-Force exercise. Therefore, the exercise critique did not identify and correct the event classification deficiency as required (P.1(a)). Inspection Report# : 2007004 (pdf) Occupational Radiation Safety Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO POST AND CONTROL A HIGH RADIATION AREA The inspectors reviewed two examples of a self-revealing, noncited violation of Technical Specification 5.7.1 resulting from a failure to control a high radiation area. Specifically, the first example occurred on February 14, 2007, while preparing to perform a remote inspection and boric acid wash down of Unit 2 Letdown Ion Exchange Vessel CHN-D01A, a worker received a dose rate alarm of 141 mr/hr on his electronic dosimeter when he removed the shielded plug from the survey/inspection port. The second example occurred on October 24, 2007, while performing decontamination on Valve SIE-614 using a vacuum in the Unit 3 containment two workers received separate electronic dosimeter alarms of 81 mr/hr and 123 mr/hr approximately 20 minutes apart. The issues were entered into the corrective action program as Condition Report/Disposition Request 2970612 and 3081978. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that the failure to post and control a high radiation area had the potential to increase personnel dose. This occurrence involved individual workers' unplanned, unintended dose that resulted from actions or conditions contrary to licensee procedures, radiation work permit, and technical specifications, therefore this finding was evaluated using the Occupational Radiation Safety Significance Determination Process. The inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue, (2) an overexposure, (3) a substantial potential for overexposure, or (4) an impaired ability to assess dose. This finding involved crosscutting aspect in the area of human performance, work control component, in that the work planning did not appropriately plan work activities by

incorporating risk insights and job site conditions. Inspection Report# : 2007005 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURAL GUIDANCE AND RADIATION WORK INSTRUCTIONS The inspectors identified a noncited violation of Technical Specification 5.4.1 resulting from a failure to follow radiation exposure permit instructions. Specifically, while touring the Unit 3 containment on October 23, 2007, the inspectors questioned six individuals at the pressurizer cubicle on the 120' level. The individuals stated they left their job site and proceeded to a new job site without informing radiation protection and receiving a radiological brief of the conditions at the new job site. The workers were coached by the licensee and the issue was entered into the corrective action program as Palo Verde Action Request 3081935. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that the non compliance to a radiation exposure permit instructions had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue; (2) an overexposure; (3) a substantial potential for overexposure; or (4) an impaired ability to assess dose. This finding involved crosscutting in the area of human performance, work practices component, in that the workers did not use human error prevention techniques such as adequate self and peer checking to appropriately evaluate work conditions.(H.4.(a)) Inspection Report# : 2007005 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Briefings of Radiological Conditions Green. The team identified a noncited violation of 10 CFR 19.12, Instructions to Workers, for the failure of radiation protection personnel to provide adequate information regarding radiological conditions and precautions to minimize exposure during pre-job briefs. Specifically, on October 1 and 3, 2007, radiation protection personnel did not adequately inform workers of radiological conditions and precautions to minimize exposure during radiological briefings. This issue was entered into the corrective action program as Palo Verde Action Request 3070507 and 3071940. The finding is greater than minor because if left uncorrected it would become a more significant safety concern in that the failure to inform workers of radiological conditions could result in unintended exposures. The finding affected the occupational radiation safety cornerstone and is determined to be of very low safety significance because it was not an as low as is reasonably achievable issue, there was not an overexposure or substantial potential for an overexposure, and the ability to assess dose was not compromised. The cause of this finding has crosscutting aspects associated with decision making in the human performance area in that radiation protection personnel failed to communicate decisions, and the basis for decisions, to personnel who had a need to know the information (H.1.(c)). This finding also has a safety culture component aspect of accountability in that radiation protection personnel did not demonstrate a proper safety focus or reinforce safety principles among peers when conducting pre-job briefings (O.1.(c)). Inspection Report# : 2007012 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings

pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : August 29, 2008

Palo Verde 3 3Q/2008 Plant Inspection Findings Initiating Events Significance: Nov 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Implementation of Risk Management Actions and Risk Assessments for the Switchyard Green. The team identified a noncited violation of 10 CFR 50.65(a)(4) for the failure to adequately assess the increase in risk and effectively implement risk mitigation actions for maintenance activities in the switchyard. Specifically, the switchyard was not being protected by controlling access and movement as required and the risk modeling did not include all work being performed. The Unit 1 shift manager and the switchyard coordinator were unaware of the movement of multiple vehicles and pieces of equipment in or near restricted areas and not all maintenance was included in the schedule provided to the switchyard coordinator for risk review. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3078392. This finding is greater than minor because the licensees risk assessment failed to consider maintenance activities that could increase the likelihood of initiating events such as work in the switchyard and failed to effectively manage compensatory measures. Inspection Manual Chapter 0609, Significance Determination Process, Appendix K, Maintenance Risk Assessment and Risk Management Significance Determination Process, was used to assess the significance. Using data from the licensees probabilistic risk assessment, a NRC Region IV senior reactor analyst calculated the risk deficit. Based on the magnitude of the calculated risk deficit being less than 1E-6/year, this finding is determined to be of very low safety significance. The cause of this finding has crosscutting aspects associated with work control of the human performance area in that the licensee did not appropriately coordinate switchyard activities incorporating risk insights (H.3.(a)) and did not communicate with each other during activities in which coordination is necessary to assure plant and human performance (H.3.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to maintain Control of Transient Combustibles Green. The team identified a noncited violation of Technical Specification 5.4.1.d for the failure of fire protection personnel to follow Procedure 14DP-0FP33, "Control of Transient Combustibles," Revision 15. Specifically, the team identified that on the 70 elevation of the Auxiliary Building (Radiation Protection Remote Monitoring Station) and in the Unit 3 containment, there were transient combustibles being stored without the proper evaluation and required permits. This issue was entered into the corrective action program as Palo Verde Action Request 3071785. The finding is considered more than minor because storing unanalyzed material could result in the potential to exceed combustible limits and is associated with an increase in the likelihood of an initiating event. Using Inspection Manual Chapter 0609, Significance Determination Process, Appendix F, Fire Protection Significance Determination Process," this issue affected the Fire Prevention and Administrative Controls Category. In this case the stored materials required a permit per the licensees procedure; however, the area was attended, fire detection and suppression was available, and the amounts did not exceed the loading calculation to the point of changing the loading classification. Therefore, this finding is considered of Low Degradation and had very low safety significance. The cause of this finding has crosscutting aspects associated with work practices in the human performance area because (1) the licensee failed to communicate human error prevention techniques such that work activities were performed safely (H.4.(a)), and (2) the licensee did not effectively communicate expectations regarding procedural compliance (H.4.(b)). The cause of this finding is also related to the safety culture component of accountability in that fire protection personnel failed to demonstrate a proper safety focus and reinforce safety principles among their peers (O.1.(c)). Inspection Report# : 2007012 (pdf) Mitigating Systems Significance: Mar 31, 2008 Identified By: NRC

Item Type: NCV NonCited Violation Failure to Establish Preventative Maintenance Procedures for Emergency Diesel Generator Fuel Oil Injection Pump O-Rings The inspectors identified a non-cited violation of Technical Specification 5.4.1.a for the failure of operations and engineering personnel to establish and implement maintenance procedures for inspection and replacement of items that have a specific lifetime. Specifically, between February 12, 2007 and March 7, 2008, operations and engineering personnel failed to inspect or replace the emergency diesel generators fuel oil injection pump upper O-rings prior to the end of their service life resulting in fuel leakage and increased unavailability and unreliability of Unit 1 Train A, Unit 2 Train B, and Unit 3 Train B emergency diesel generators. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3143422. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because the licensee failed to use available operating experience, including vendor recommendations, to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to Properly Implement the Systematic Troubleshooting Process The inspectors identified two examples of a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of operations, engineering, and maintenance personnel to follow procedures for troubleshooting failures of safety related components. Specifically, between January 8 and January 13, 2008, operations, engineering, and maintenance personnel failed to incorporate the adequate level of detail into their troubleshooting plans for the Unit 3 auxiliary feedwater trip and throttle Valve AFA HV 0054 when it failed to fully close upon demand from the control room hand switch, and for the Unit 3 log power Channel A when induced noise was present. These issues were entered into the licensee's corrective action program as Palo Verde Action Requests 3120075 and 3118744. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. Both examples have a crosscutting aspect in the area of human performance associated with decision making because the licensee did not obtain appropriate interdisciplinary input and reviews on safety significant or risk significant decisions [H.1(a)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Adequate Staffing Levels Results in Heavy Use of Overtime to Maintain Adequate Shift Coverage The inspectors identified a non-cited violation of Technical Specification 5.2.2.d involving the routine use of excessive overtime for operations personnel that performed safety-related functions. Specifically, between January 1 and December 31, 2007, operations personnel routinely used excessive overtime. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3112231. The finding is greater than minor because if left uncorrected the finding would become a more significant safety concern in that the routine use of excessive work hours increases the likelihood of operator errors. Using the IMC 0609, "Significance Determination Process," Appendix M, the finding is determined to have very low safety significance because there was no recent instances where findings of low to moderate (White) or greater significance were attributed to the increased use of overtime by operating personnel. The finding has a crosscutting aspect in the area of human performance associated with resources because the licensee failed to maintain sufficient qualified operations personnel to maintain working hours within guidelines without the excessive use of overtime [H.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC

Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Class 1E 125 V DC System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to ensure that potentially nonconforming conditions associated with the Class 1E 125 Vdc system were reviewed for operability. Specifically, between September 29, 2007 and March 7, 2008, engineering personnel failed to ensure all relevant information was reviewed for operability when it was determined that vendor recommended preventative maintenance tasks were not being performed on the Class 1E 125 Vdc system. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3144707. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because safety significant decisions were not verified to validate underlying assumptions and identify unintended consequences [H.1(b)]. Inspection Report# : 2008002 (pdf) Significance: Oct 26, 2007 Identified By: NRC Item Type: NCV NonCited Violation Eight Examples of the Failure to Implement the operability Determination Process Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," with eight examples for the failure of the licensee to adequately evaluate degraded and unanalyzed conditions to support operability decision making between May 2006 and October 26, 2007. The team noted a significant number of weak or non-existent operability evaluations of degraded conditions affecting safety-related equipment. There was a lack of understanding of the need to assess operability for some conditions adverse to quality and a lack of knowledge or skills necessary to conduct quality operability assessments. The examples of the violation involved two instances of conditions adverse to quality documented in databases outside of the corrective action program, missile hazards near the essential spray pond, two issues effecting essential cooling water system heat exchangers, 480V and 4160V motor terminations, oil leaks on the emergency diesel generators, and high lead content in a Unit 3 low pressure safety injection pump. Each of the individual technical issues was entered into the licensees corrective action program. These examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel (1) did not make safety significant decisions using a systematic process (H.1.(a)), and (2) failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding also have crosscutting aspects associated with evaluation and corrective action of the problem identification and resolution area in that licensee personnel (1) did not assess conditions adverse to quality for impacts to the operability of safety- related equipment (P.1.(c), and (2) did not address safety issues in a timely manner P.1.(d)). The causes of the examples of this finding also related to the safety culture component of accountability in that workers and managers failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 25, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish maintenance Rule Goals for the Safety Injection System Green. The team identified a noncited violation of 10 CFR 50.65, for the failure of engineering personnel to establish goals and monitor the performance of the safety injection system. Specifically, on March 22, 2007, engineering personnel failed to establish goals to properly monitor system performance, or provide a technical justification to demonstrate that monitoring under 10 CFR 50.65(a)(1) was not required for the safety injection system following the system changing status from 10 CFR 50.65(a)(2) to 10 CFR 50.65(a)(1). This issue was entered into the corrective action program as Palo Verde Action Requests 3074255 and 3076699. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significant Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since there was no loss of safety function. The cause of this finding has crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area in that engineering personnel failed to take appropriate actions to address safety issues and adverse trends in a timely manner (P.1.(d)) and self assessment of the problem identification and resolution area in that engineering personnel did not perform self assessments that were comprehensive, objective, and self critical (P.3.(a)).

Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Six Examples of a Failure to Implement the Corrective Action Program Requirements Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion XVI, Corrective Action, with six examples for the failure of the licensee to identify, evaluate, or correct conditions adverse to quality between 1988 and October 10, 2007. The corrective actions implemented by the licensee to address the substantive human performance and problem identification and resolution crosscutting issues were ineffective in sustaining performance improvement as noted by licensee self assessments, external industry reviews, and NRC inspections. The team also identified several examples of poor and inconsistent implementation of corrective action program behaviors. The examples of the violation involved not entering the use of unqualified tape in containment in the corrective action process, evaluating the condition, or taking timely actions to remove the tape from all three units; not identifying, evaluating, or implementing timely corrective actions associated with operating experience applicable to the auxiliary feedwater pump trip and throttle valve; not implementing timely corrective actions for water intrusion and flooding of underground manholes and cable vaults; inadequate evaluation for nonconforming Target Rock reed switches; not evaluating and correcting a degraded condition with post accident monitoring instrument chart recorders, and not correcting a degraded/nonconforming condition associated with 3 inch Borg-Warner check valves. Each of the individual technical issues was entered into the licensees corrective action program. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with decision making of the human performance area in that operations and engineering personnel failed to use conservative assumptions for operability decision-making when evaluating degraded and nonconforming conditions (H.1.(b)). The causes of the examples of this finding have crosscutting aspects associated with (1) corrective actions of the problem identification and resolution area because the licensee failed to evaluate previous issues such that resolutions addressed all conditions affecting operability (P.1.(c)), (2) operating experience of the problem identification and resolution area in that engineering personnel failed to ensure implementation and institutionalization of operating experience through changes to station processes, procedures, equipment, and training programs (P.2.(b)), and (3) self assessment of the problem identification and resolution area in that the licensee did not follow their benchmarking and self assessment guide to ensure findings were evaluated in their corrective action program (P.3.(c)). The causes of the examples of this finding also related to the safety culture component of accountability in that workforce and management personnel failed to demonstrate a proper safety focus and reinforce safety principles (O.1.(b) and O.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 10, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Evaluate Performance Monitoring Criteria for the Auxiliary Feedwater System Green. The team identified a noncited violation of 10 CFR 50.65(a)(2) for the failure of maintenance rule and engineering personnel to demonstrate that the performance or condition of structures, systems, or components was being effectively controlled through appropriate preventive maintenance to ensure systems or components remained capable of performing their intended function. Specifically, between April and October 2007, an inadequate evaluation of maintenance rule performance criteria was performed and, even though the Unit 2 auxiliary feedwater Train A had exceeded its maintenance rule 10 CFR 50.65(a)(2) performance criteria, no goal setting and monitoring was performed as required by 10 CFR 50.65(a)(1) of the maintenance rule. This issue was entered into the corrective action program as Palo Verde Action Request 3075907. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding has crosscutting aspects associated with self assessments of the problem identification and resolution area in that maintenance rule and engineering personnel failed to perform self assessments that were comprehensive, appropriately objective, and self-critical (P.3.(a)). The cause of this finding has crosscutting aspects associated with decision-making of the human performance area in that engineering personnel failed to make safety-significant or risk-significant decisions using a systematic process (H.1. (a)). The cause of this finding is also related to the safety culture component of accountability in that management did not reinforce safety standards and display behaviors that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf)

Significance: Oct 04, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Implement Adequate Design Controls for Condensate Storage Tank Temperature Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," with for the failure to translate design basis requirements into procedures to ensure the plant is operated within its design basis. Specifically, between 1985 and October 2007, the maximum condensate storage tank temperature requirements did not include the effect of recirculated hot condensate water from the main condenser. The issue was entered into the corrective action program as 3073243. The examples associated with this finding are greater than minor because they were associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the examples associated with this finding are determined to have very low safety significance since they only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The causes of the examples of this finding have crosscutting aspects associated with corrective action of the problem identification and resolution area in that engineering personnel did not assess conditions adverse to quality for impacts to the operability of safety related equipment (P.1.(c)). Inspection Report# : 2007012 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow procedures for Temporary Shielding Installation Green. The team identified a noncited violation of Technical Specification 5.4.1.a for the failure of radiation protection personnel to follow procedures for installing temporary shielding at the 87 foot elevation of the auxiliary building west penetration room. Specifically, temporary shielding (Package A-87-10) was installed in direct contact and across the Train A low pressure safety injection pressure instrument sensing line. However, a piping stress analysis was not performed as required by Procedure 75RP-9RP25, Temporary Shielding, Revision 9. This issue was entered into the corrective action program as Palo Verde Action Requests 3071468 and 3072224. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of configuration control and affected the cornerstone objective to ensure the availability and capability of systems to respond to initiating events. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, this finding is determined to be of very low safety significance because the condition did not result in an actual loss of safety function, and did not screen as risk significant or contribute to external event initiated core damage sequences since it did not involve a loss or degradation of equipment designed to mitigate a seismic event. This finding has crosscutting aspects associated with the work practices component of the human performance area because the licensee did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the shielding installation (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Installation of Fire Sprinklers Green. The team identified a noncited violation of License Condition 2.C(6) for the failure to install sprinkler heads in accordance with the fire protection program. Specifically, on October 2, 2007, the team identified several upright fire sprinkler heads in the auxiliary building that were incorrectly installed in a downward orientation. This issue was entered into the corrective action program as Palo Verde Action Request 3073824. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, Fire Protection SDP, because it was associated with the suppression element of defense-in-depth. Since the installed configuration of the sprinkler heads represented a low degradation of the fire suppression system, in accordance with Section 1.3.1, of Inspection Manual Chapter 0609, Appendix F, the issue was determined to have very low safety significance. Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: FIN Finding

Failure to Install Emergency Lighting in Containment Prior to Work Commencement Green. The team identified a finding for the failure of maintenance personnel to install emergency lighting in containment in support of the refueling outage per repetitive maintenance work Order 2935399 and work Instruction WSL 24436. As a result, work began in the Unit 3 containment with no emergency lighting installed and no egress contingency plan for a loss of containment lighting. This issue was entered into the corrective action program as Palo Verde Action Request 3070783. This finding is considered more than minor because if left uncorrected, a failure to install emergency lighting could hamper emergency response activities in the containment or complicate emergency egress from the containment. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, Significance Determination Process Using Qualitative Criteria, the finding is determined to be of very low safety significance because emergency lighting was necessary for personnel safety and personnel were expected to carry flashlights when responding to events. The cause of the finding has crosscutting aspects associated with work control of the human performance area in that maintenance personnel failed to properly plan the emergency lighting installation work by incorporating contingencies in case the work was not completed in the appropriate timeframe (H.3.(a)). The cause of this finding is also related to the safety culture component of accountability in that management personnel failed to reinforce safety standards and display behavior that reflected safety as an overriding priority (O.1.(b)). Inspection Report# : 2007012 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Configuration Control of Pressurizer Instrument Condensing Pot Support Brackets Green. The team identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of maintenance and engineering personnel to maintain proper configuration of the support brackets for the pressurizer condensate pots in accordance with design drawings. Specifically, on October 2, 2007, the team identified that the support bracket U-bolts were not tight against the condensate pot piping, jam nuts were not installed on the U-bolts, and jacking bolts were not in full contact with the pressurizer vessel. The support brackets minimize lateral motion during a seismic event. This issue was entered into the corrective action program as Palo Verde Action Requests PVAR 3070805 and 3075704. This finding is greater than minor because it was associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. This finding has crosscutting aspects associated with the work practices component of the human performance area because maintenance personnel did not effectively use human error prevention techniques such as self checking and proper documentation of activities for the installation of the support bracket (H.4.(a)). Inspection Report# : 2007012 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the

requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Mar 16, 2005 Identified By: NRC Item Type: FIN Finding FAILURE TO TRACK CONTROL ROOM DISCREPANCIES The inspectors identified a finding for the failure to follow administrative guidelines provided to operations personnel for identifying, documenting, and tracking main control room deficiencies. Specifically, approximately 75 control room instrument and control room meter face plates in Units 1, 2, and 3 were degraded and were not individually tracked in the control room discrepancy log. Furthermore, discrepancy labels containing the control room discrepancy log number and description of the discrepancy were not placed adjacent to or as close as possible to each affected device. This issue was entered into the corrective action program as Condition Report/Disposition Request 2782501. The finding is determined to be greater than minor because if left uncorrected, it could become a more significant safety concern in that the condition could cause an operator to take an inappropriate action based on expected plant response or conversely cause an operator not to take action when action is required. The senior reactor analyst determined that this finding was not appropriate to be evaluated using the significance determination process since this finding was associated with multiple human performance actions. Based on management review, the finding is determined to have very low safety significance because it only affected the mitigating systems cornerstone, and there was no adverse impact to plant equipment. Inspection Report# : 2005002 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures Resulted in Water Transfer from the Spent Fuel Pool A self revealing non-cited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, on January 13, 2008, operations personnel failed to properly implement Procedure 40OP 9PC06, "Fuel Pool Cleanup and Transfer," Revision 41, for operating the pool cooling cleanup system, resulting in pool cooling cleanup Filter PCN F01B bypass Valve

PCN V061 being improperly aligned. This resulted in the inadvertent transfer of 300 gallons of spent fuel pool water to the refueling water tank. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3121713. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because the finding did not result in loss of cooling to the spent fuel pool; the finding did not result from fuel handling errors that caused damage to the fuel clad integrity or a dropped assembly; and the finding did not result in a loss of spent fuel pool inventory greater than ten percent of the spent fuel pool volume. This finding has a crosscutting aspect in the area of human performance associated with work practices because the licensee failed to use adequate human error prevention techniques, such as pre job briefings, to ensure that the pool cooling cleanup system activity was performed safely [H.4(a)]. Inspection Report# : 2008002 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation INADEQUAT DESIGN CONTROLS FOR REFUELING MACHINE The inspectors identified two examples of a noncited violation of 10 CFR Part 50, Criterion III, "Design Control," for the failure of engineering personnel to ensure that the design bases of the refueling machine were adequately translated into specifications, drawings, procedures, or instructions. Specifically, for the first example, between October 27, 2006, and October 25, 2007, the licensee inappropriately changed the facility as noted in the Updated Final Safety Analysis Report when a modification to the refueling machine introduced a single failure that could result in a failure of both the underload and overload protection features. This change resulted in more than a minimal increase in the consequences of a malfunction, in that the force limits on a fuel assembly grid strap could be exceeded. For the second example, between initial construction and December 5, 2007, procedures and instructions did not limit the stall torque of the hoist motor for the refueling machine. These issues were entered into the corrective action program as Condition Report/Disposition Requests 3030759 and 3068656. The finding is greater than minor because it would become a more significant safety concern if left uncorrected in that refueling equipment malfunctions could result in damaged fuel. Manual Chapter 0609, Appendix M, "Significance Determination Process Using Qualitative Criteria," was used since the Significance Determination Process methods and tools were not adequate to determine the significance of the finding. This finding affects the barrier integrity cornerstone and is determined to have very low safety significance by NRC management review because it was a deficiency that did not result in the actual degradation of fuel. Inspection Report# : 2007005 (pdf) Significance: Oct 02, 2007 Identified By: NRC Item Type: NCV NonCited Violation Incorrect Rigging of Personal Airlock Door Green. The team identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of maintenance personnel to properly rig the Unit 3 100 foot elevation inner personnel airlock door in accordance with engineering drawings. Specifically, the suspended rigging was completed with the inappropriate placement of wire rope slings over two locking pins resulting in an unanalyzed force being applied to the doors operating mechanism. This issue was entered into the corrective action program as Palo Verde Action Request 3086057. The finding is greater than minor because it could become a more significant safety concern if left uncorrected in that the applied suspended force on the bronze bushing and the doors operating mechanism, which were not designed for vertical loading, could degrade the personnel airlock door sealing capability. This finding can not be evaluated by the significance determination process because Inspection Manual Chapter 0609, "Significance Determination Process," Appendix A, "Determining the Significance of Reactor Inspection Findings for At-Power Situations," and Appendix G, "Shutdown Operations Significance Determination Process," does not apply to the PAL door for the plant conditions that existed during the event. This finding affects the barrier integrity cornerstone and is determined to be of very low safety significance by NRC management review using the Inspection Manual Chapter 0609, "Significance Determination Process," Appendix M, "Significance Determination Process Using Qualitative Criteria," because it was a deficiency that did not result in the actual breach of the containment barrier. The cause of this finding has crosscutting aspects associated with the work practices aspect of the human performance area in that maintenance personnel failed to provide adequate oversight of work activities (H.4.(c)). Inspection Report# : 2007012 (pdf) Emergency Preparedness

Significance: Jun 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Risk Significant Planning Standard The inspectors identified a noncited violation (NCV) of 10 CFR 50.54(q) and 10 CFR Part 50, Appendix E.IV.F.2.g, for the licensees failure to correct an identified risk significant planning standard weakness between May 2, 2007 and October 28, 2007. Specifically, the licensee failed to implement adequate corrective actions for identified weaknesses in the ability to correctly make a Site Area Emergency declaration for a steam generator tube rupture event. This issue was entered into the licensees correction action program as Palo Verde Action Request 3083911. The NRC determined that the inability to consistently implement an Emergency Action Level was a performance deficiency within the licensees control. This finding is more than minor because it was associated with the Emergency Preparedness attribute of emergency response organization performance and affected the cornerstone objective to implement adequate measures to protect the health and safety of the public because the inability to properly recognize and classify an emergency condition affects the licensees ability to implement adequate protective measures. This finding was preliminarily determined to be of low to moderate safety significance. After consideration of information provided during and after a Regulatory Conference held on March 25, 2008, the NRC has concluded that the knowledge deficiency identified among senior operators would not likely result in an incorrect emergency classification during a steam generator tube rupture event, and the NRC has concluded the significance of the inspection finding is appropriately characterized as Green (i.e., a finding of very low safety significance). This violation is being treated as an NCV, consistent with Section VI of the NRC Enforcement Policy. The cause of this finding has crosscutting aspects associated with the corrective action aspect of the problem identification and resolution area in that the licensee failed to thoroughly evaluate problems such that resolutions ensured correcting problems [P.1.(c)]. The cause of this finding was also related to the safety culture component of accountability in that the licensee failed to demonstrate a proper safety focus and reinforce safety principles [O.1.(c)]. Inspection Report# : 2008003 (pdf) Significance: Oct 08, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inability to Implement Two Emergency Action Levels Green. The team identified a Green noncited violation of 10 CFR 50.54(q) and §50.47(b)(4), for the failure of the licensee to be able to implement EAL 3-12 and EAL7-1. Specifically, area radiation Monitor RU-18 could not be utilized in the vicinity of the remote shutdown panels and therefore, the emergency classification could not be declared at the Alert level as required in Procedure EPIP-99. In addition, the licensee improperly overclassified EAL 7-1 as an Alert when presented conditions warranting a classification of a Notification of Unusual Event. Specifically, the licensee did not develop a procedure to enable personnel to differentiate between an aircraft and an airliner and therefore, the proper emergency classifications could not be consistently determined. This finding was entered into the licensees corrective action program as Condition Report Disposition Requests 3071570, 3071572, and 3085175. The team determined that the inability to implement EALs was a performance deficiency. The finding was more than minor because it was associated with the Emergency Preparedness attribute of procedure quality and could affect the cornerstone objective associated with the licensees ability to correctly classify an emergency condition which would affect the licensees ability to implement adequate measures to protect the health and safety of the public. Using the Manual Chapter 0609, "Significance Determination Process," Appendix B, Emergency Preparedness SDP, the finding was determined to have very low safety significance because the licensee would be unable to declare one EAL at the Alert and one EAL at the Notification of Unusual Event level. The cause of this finding had crosscutting aspects associated with the corrective action of the PI&R area in that the licensee had previous opportunities to identify the deficiencies (P.1.(a)). Inspection Report# : 2007012 (pdf) Occupational Radiation Safety Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO POST AND CONTROL A HIGH RADIATION AREA The inspectors reviewed two examples of a self-revealing, noncited violation of Technical Specification 5.7.1 resulting from a failure to control a high radiation area. Specifically, the first example occurred on February 14, 2007, while preparing to perform a remote inspection and boric acid wash down of Unit 2 Letdown Ion Exchange Vessel CHN-D01A, a worker received a dose rate alarm of 141 mr/hr on his electronic dosimeter when he removed the shielded plug from the survey/inspection port. The second example occurred on October 24, 2007, while performing decontamination on Valve SIE-614 using a vacuum in the Unit 3 containment two workers received separate electronic dosimeter alarms of 81 mr/hr and 123 mr/hr approximately 20 minutes apart. The issues were entered into the corrective action program as

Condition Report/Disposition Request 2970612 and 3081978. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that the failure to post and control a high radiation area had the potential to increase personnel dose. This occurrence involved individual workers' unplanned, unintended dose that resulted from actions or conditions contrary to licensee procedures, radiation work permit, and technical specifications, therefore this finding was evaluated using the Occupational Radiation Safety Significance Determination Process. The inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue, (2) an overexposure, (3) a substantial potential for overexposure, or (4) an impaired ability to assess dose. This finding involved crosscutting aspect in the area of human performance, work control component, in that the work planning did not appropriately plan work activities by incorporating risk insights and job site conditions. Inspection Report# : 2007005 (pdf) Significance: Dec 31, 2007 Identified By: NRC Item Type: NCV NonCited Violation FAILURE TO FOLLOW PROCEDURAL GUIDANCE AND RADIATION WORK INSTRUCTIONS The inspectors identified a noncited violation of Technical Specification 5.4.1 resulting from a failure to follow radiation exposure permit instructions. Specifically, while touring the Unit 3 containment on October 23, 2007, the inspectors questioned six individuals at the pressurizer cubicle on the 120' level. The individuals stated they left their job site and proceeded to a new job site without informing radiation protection and receiving a radiological brief of the conditions at the new job site. The workers were coached by the licensee and the issue was entered into the corrective action program as Palo Verde Action Request 3081935. This finding is greater than minor because it is associated with the occupational radiation safety program and process attribute and affected the cornerstone objective, in that the non compliance to a radiation exposure permit instructions had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined that this finding was of very low safety significance because it did not involve: (1) an ALARA planning or work control issue; (2) an overexposure; (3) a substantial potential for overexposure; or (4) an impaired ability to assess dose. This finding involved crosscutting in the area of human performance, work practices component, in that the workers did not use human error prevention techniques such as adequate self and peer checking to appropriately evaluate work conditions.(H.4.(a)) Inspection Report# : 2007005 (pdf) Significance: Oct 03, 2007 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Briefings of Radiological Conditions Green. The team identified a noncited violation of 10 CFR 19.12, Instructions to Workers, for the failure of radiation protection personnel to provide adequate information regarding radiological conditions and precautions to minimize exposure during pre-job briefs. Specifically, on October 1 and 3, 2007, radiation protection personnel did not adequately inform workers of radiological conditions and precautions to minimize exposure during radiological briefings. This issue was entered into the corrective action program as Palo Verde Action Request 3070507 and 3071940. The finding is greater than minor because if left uncorrected it would become a more significant safety concern in that the failure to inform workers of radiological conditions could result in unintended exposures. The finding affected the occupational radiation safety cornerstone and is determined to be of very low safety significance because it was not an as low as is reasonably achievable issue, there was not an overexposure or substantial potential for an overexposure, and the ability to assess dose was not compromised. The cause of this finding has crosscutting aspects associated with decision making in the human performance area in that radiation protection personnel failed to communicate decisions, and the basis for decisions, to personnel who had a need to know the information (H.1.(c)). This finding also has a safety culture component aspect of accountability in that radiation protection personnel did not demonstrate a proper safety focus or reinforce safety principles among peers when conducting pre-job briefings (O.1.(c)). Inspection Report# : 2007012 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the

cover letters to security inspection reports may be viewed. Miscellaneous Last modified : November 26, 2008

Palo Verde 3 4Q/2008 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2008 Identified By: NRC Item Type: FIN Finding Failure to Promptly Identify and Correct Degraded Hydrostatic Penetration Seals The inspectors identified a finding of Palo Verde Nuclear Generating Station Procedure 01DP 0AP10, "Corrective Action Program," Revision 1, for the failure of operations and engineering personnel to promptly identify and correct a condition adverse to quality. Specifically, between February 13, 2007 and July 18, 2008, operations and engineering personnel failed to identify and correct degraded hydrostatic flood penetration seals which provide protection to safety-related equipment during internal flooding events. This resulted in over 100 hydrostatic penetration seals in the control, diesel, and main steam support structure buildings being left degraded for greater than 12 months. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3264501. The finding is greater than minor because it is associated with the protection against external factors (i.e. flood hazard) attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because operations and engineering personnel failed to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008005 (pdf) Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the RWT Instruments in a Timely Manner The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of the licensee to correct a deficiency associated with the refueling water tank instrument pit in a timely manner. Specifically, between June 16, 2006, and July 2, 2008, maintenance and engineering personnel failed to ensure the openings of the pit covers were adequately sealed to prevent rain water intrusion. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3194904. The performance deficiency associated with this finding involved the failure of maintenance personnel to correct a condition adverse to quality in a timely manner. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterizations of Findings," the finding

required a Phase 3 analysis by a Senior Reactor Analyst, since the finding is potentially risk significant due to external initiating event core damage sequences. Based on the analysis performed, the analyst concluded that the finding had very low safety significance (Green) because of the very small probability of a large rainfall event and a loss of coolant accident occurring at the same time. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish Preventative Maintenance Procedures for Emergency Diesel Generator Fuel Oil Injection Pump O-Rings The inspectors identified a non-cited violation of Technical Specification 5.4.1.a for the failure of operations and engineering personnel to establish and implement maintenance procedures for inspection and replacement of items that have a specific lifetime. Specifically, between February 12, 2007 and March 7, 2008, operations and engineering personnel failed to inspect or replace the emergency diesel generators fuel oil injection pump upper O-rings prior to the end of their service life resulting in fuel leakage and increased unavailability and unreliability of Unit 1 Train A, Unit 2 Train B, and Unit 3 Train B emergency diesel generators. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3143422. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because the licensee failed to use available operating experience, including vendor recommendations, to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Two Examples of a Failure to Properly Implement the Systematic Troubleshooting Process The inspectors identified two examples of a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure of operations, engineering, and maintenance personnel to follow procedures for troubleshooting failures of safety related components. Specifically, between January 8 and January 13, 2008, operations, engineering, and maintenance personnel failed to incorporate the adequate level of detail into their troubleshooting plans for the Unit 3 auxiliary feedwater trip and throttle Valve AFA-HV-0054 when it failed to fully close upon demand from the control room hand switch, and for the Unit 3 log power Channel A when induced noise was present. These issues were entered into the licensee's corrective action program as Palo Verde Action Requests 3120075 and 3118744. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. Both examples have a crosscutting aspect in the area of human performance associated with decision-making because the licensee did not obtain appropriate interdisciplinary input

and reviews on safety-significant or risk-significant decisions [H.1(a)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Adequate Staffing Levels Results in Heavy Use of Overtime to Maintain Adequate Shift Coverage The inspectors identified a non-cited violation of Technical Specification 5.2.2.d involving the routine use of excessive overtime for operations personnel that performed safety-related functions. Specifically, between January 1 and December 31, 2007, operations personnel routinely used excessive overtime. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request 3112231. The finding is greater than minor because if left uncorrected the finding would become a more significant safety concern in that the routine use of excessive work hours increases the likelihood of operator errors. Using the IMC 0609, "Significance Determination Process," Appendix M, the finding is determined to have very low safety significance because there were no recent instances where findings of low to moderate (White) or greater significance were attributed to the increased use of overtime by operating personnel. The finding has a crosscutting aspect in the area of human performance associated with resources because the licensee failed to maintain sufficient qualified operations personnel to maintain working hours within guidelines without the excessive use of overtime [H.2(b)]. Inspection Report# : 2008002 (pdf) Significance: Mar 31, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Class 1E 125 V DC System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to ensure that potentially nonconforming conditions associated with the Class 1E 125 Vdc system were reviewed for operability. Specifically, between September 29, 2007 and March 7, 2008, engineering personnel failed to ensure all relevant information was reviewed for operability when it was determined that vendor recommended preventative maintenance tasks were not being performed on the Class 1E 125 Vdc system. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3144707. This finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective to ensure the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because it did not represent a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because safety significant decisions were not verified to validate underlying assumptions and identify unintended consequences [H.1(b)]. Inspection Report# : 2008002 (pdf) Significance: N/A Sep 30, 2006 Identified By: NRC Item Type: FIN Finding

SUMMARY

FINDING. 95002 TEAMS ASSESSMENT OF IR 2004-14 (YELLOW) 10 CFR PART 50, APPENDIX B, CRITERION III, VIOLATION

The NRC performed a followup supplemental inspection to assess the licensees corrective actions associated with a Yellow design control finding involving the potential for air entrainment into the emergency core cooling system. The team concluded that the technical issues specifically associated with the voided emergency core cooling system piping have been addressed. However, the Yellow finding will remain open because the licensee did not implement effective corrective actions for all of the causes associated with the Yellow finding. Specifically, the licensees actions to improve questioning attitude, technical rigor, and technical review were not fully effective. Also, the implementation of performance measures and metrics to monitor the effectiveness of corrective actions associated with the Yellow finding were not adequate to assess effectiveness. This performance issue was previously characterized as a 10 CFR Part 50, Appendix B, Criterion III, violation having substantial safety significance (Yellow), and was originally identified in NRC Inspection Report 05000528; 05000529; 05000530/2004014. The licensees corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and technical review have not been completely effective. Specifically, following implementation of corrective actions between September 2005 and March 2006, the licensee: (1) continued to conduct inadequate technical reviews of emerging issues; (2) did not routinely question the validity of engineering assumptions used to support operability decisions; (3) did not consistently implement a qualify, validate, and verify process; and (4) did not consistently notify operations personnel of immediate operability concerns. The team concluded that adequate qualitative or quantitative measures for determining the effectiveness of the corrective actions to prevent recurrence have not been established. For example, not all relevant performance data was considered when performance monitoring measures were developed to assess the effectiveness of corrective actions. When the pertinent data was considered, or otherwise clarified, the performance measures suggested declining rather than improving performance in some areas. The team also concluded that the licensee had not completed adequate reviews of the effectiveness of corrective actions prior to their notifying the NRC of their readiness for inspection of the Yellow finding. Specifically, several assessments were completed after the requested dated of the inspection (June 2006). Several of the assessments noted that insufficient progress in resolving some of the root and contributing causes had been made. Additionally, a standard guideline for metrics was not issued and implemented until July 2006. Inspection Report# : 2006010 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related

programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Barrier Integrity Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedural Requirements to Implement Technical Specification 5.5.2.b The inspectors identified a non-cited violation of Technical Specification 5.5.2.b, "Primary Coolant Sources Outside Containment," for the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. Specifically, between January 8, 1993 and September 30, 2008, engineering personnel failed to ensure portions of the containment spray system, which could be in contact with radioactive fluids outside containment, were included in the integrated leak test requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3170965. The performance deficiency associated with this finding was the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. The finding is greater than minor because it is associated with the design control and procedural quality attribute associated with maintaining radiological barrier functionality for the auxiliary building of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the physical design barriers protect the public from radio nuclide releases caused by accidents or events. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance because it only represented a degradation of the radiological barrier function of the auxiliary building. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf) Significance: Mar 31, 2008 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Follow Procedures Resulted in Water Transfer from the Spent Fuel Pool A self-revealing non-cited violation of Technical Specification 5.4.1.a was identified for the failure of operations personnel to follow procedures. Specifically, on January 13, 2008, operations personnel failed to properly implement Procedure 40OP-9PC06, "Fuel Pool Cleanup and Transfer," Revision 41, for operating the pool cooling cleanup system, resulting in pool cooling cleanup Filter PCN-F01B bypass Valve PCN-V061 being improperly aligned. This resulted in the inadvertent transfer of 300 gallons of spent fuel pool water to the refueling water tank. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3121713. The finding is greater than minor because it is associated with the configuration control and human performance attributes of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. Using the Manual Chapter 0609, "Significance Determination Process," Phase 1 Worksheets, the finding is determined to have very low safety significance because the finding did not result in loss of cooling to the spent fuel pool; the finding did not result from fuel handling errors that caused damage to the fuel clad integrity or a dropped assembly; and the finding did not result in a loss of spent fuel pool inventory greater than ten percent of the spent fuel pool volume. This finding has a crosscutting aspect in the area of human performance

associated with work practices because the licensee failed to use adequate human error prevention techniques, such as pre-job briefings, to ensure that the pool cooling cleanup system activity was performed safely [H.4(a)]. Inspection Report# : 2008002 (pdf) Emergency Preparedness Significance: Jun 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Risk Significant Planning Standard The inspectors identified a noncited violation (NCV) of 10 CFR 50.54(q) and 10 CFR Part 50, Appendix E.IV.F.2.g, for the licensees failure to correct an identified risk significant planning standard weakness between May 2, 2007 and October 28, 2007. Specifically, the licensee failed to implement adequate corrective actions for identified weaknesses in the ability to correctly make a Site Area Emergency declaration for a steam generator tube rupture event. This issue was entered into the licensees correction action program as Palo Verde Action Request 3083911. The NRC determined that the inability to consistently implement an Emergency Action Level was a performance deficiency within the licensees control. This finding is more than minor because it was associated with the Emergency Preparedness attribute of emergency response organization performance and affected the cornerstone objective to implement adequate measures to protect the health and safety of the public because the inability to properly recognize and classify an emergency condition affects the licensees ability to implement adequate protective measures. This finding was preliminarily determined to be of low to moderate safety significance. After consideration of information provided during and after a Regulatory Conference held on March 25, 2008, the NRC has concluded that the knowledge deficiency identified among senior operators would not likely result in an incorrect emergency classification during a steam generator tube rupture event, and the NRC has concluded the significance of the inspection finding is appropriately characterized as Green (i.e., a finding of very low safety significance). This violation is being treated as an NCV, consistent with Section VI of the NRC Enforcement Policy. The cause of this finding has crosscutting aspects associated with the corrective action aspect of the problem identification and resolution area in that the licensee failed to thoroughly evaluate problems such that resolutions ensured correcting problems [P.1.(c)]. The cause of this finding was also related to the safety culture component of accountability in that the licensee failed to demonstrate a proper safety focus and reinforce safety principles [O.1.(c)]. Inspection Report# : 2008003 (pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed.

Miscellaneous Last modified : April 07, 2009

Palo Verde 3 1Q/2009 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Mar 31, 2009 Identified By: NRC Item Type: FIN Finding Failure to Correct Deficient Condition for the Essential Spray Pond Chemical Addition System Valves High Failure Rate The inspectors identified a finding for the failure of engineering and maintenance personnel to adequately implement timely corrective actions for deficiencies associated with the essential spray pond sodium hypochlorite chemical addition system. Specifically, between May 2006 and March 2009, corrective actions to replace degraded sodium hypochlorite valves with a more reliable chemical addition system were not taken resulting in the Unit 2 spray pond Train A chemistry pH level being out of specification high on two occasions. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3277070. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely in a timely manner [H.1(c)]. Inspection Report# : 2009002 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Inspect or Test, and Repair Fire Penetration Seals The inspectors identified 5 examples of a non-cited violation of License Condition 2.C.(7), 2.C.(6), and 2.F for Unit 1, Unit 2, and Unit 3, respectively, for the failure of engineering and maintenance personnel follow procedures to adequately inspect and repair fire penetration seals. Specifically, between 2004 and August 2008, engineering and maintenance personnel failed to inspect and repair fire penetration seals, which provide protection to safety-related equipment during fire events, resulting in the licensee declaring 4 fire penetration seals degraded and 1 non-functional. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3295124. The finding is more than minor because it was associated with the external factors attribute (i.e. fire) of the mitigating systems cornerstone and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process." Based on the

analysis performed, the inspector concluded that the degradation of the fire barrier penetration seals represented a low degradation of the fire confinement element of the fire protection program, the degraded fire barrier penetration seals had no credible fire damage state, and that the fire ignition sources present could not damage the post fire safe shutdown equipment, and therefore determined the finding to have very low safety significance. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues [P.1 (a)] Inspection Report# : 2009002 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Evaluation for Potential Emergency Diesel Generator Slow Start Issue The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on November 8, 2008, Palo Verde Nuclear Generating Station did not adequately test the emergency diesel generator to verify that a newly identified emergency diesel generator governor issue, would not cause the emergency diesel generators start time to exceed the Technical Specification allowable limit of 10 seconds. Palo Verde Nuclear Generating Station did not specify testing requirements and acceptance criteria to ensure continued operability of the affected emergency diesel generators. As an immediate corrective action, Palo Verde Nuclear Generating Station reevaluated the issue and specified additional testing requirements with specific acceptance criteria for the affected emergency diesel generators pending completion of a hardware modification that would eliminate the issue. The licensee documented this performance deficiency in Palo Verde Action Request 3280971. The finding was more than minor because, if left uncorrected, it had the potential to lead to a more significant safety concern; specifically, that emergency diesel generator start time in excess of the Technical Specification allowable maximum may not have been promptly identified. The finding is associated with the mitigating systems cornerstone. The finding was evaluated in accordance with Inspection Manual Chapter 0609.04, and determined to be of very low safety significance because the finding was confirmed not to result in loss of operability or functionality. The finding had a crosscutting aspect in the problem identification and resolution component of the corrective action program because Palo Verde Nuclear Generating Station did not thoroughly evaluate operability of the emergency diesel generators that remained susceptible to governor-related start time degradation. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedure for Screening Significant Condition Adverse to Quality The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures and Drawings, for the licensees failure to follow procedures for identifying the significance of a significant condition adverse to quality. Specifically, the Action Request Review Committee screened Palo Verde Action Request 3221258 as an adverse Condition Report Disposition Request, despite the fact that the Procedure 01DP-OAP12 required it to be screened as significant. This error resulted in the failure to understand the failure mode associated with a safety related essential cooling water pump such that corrective actions would prevent recurrence. The licensee documented the failure to properly screen this issue for significance in Palo Verde Action Request 3288713. The finding is more than minor because the finding is associated with the equipment performance attribute of the mitigating systems cornerstone, and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors utilized Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," to determine that the finding was of very low safety significance because it did not represent a design or qualification deficiency, did not result in a

loss of safety function, or screen as a risk-significant external event. The cause of this finding is related to the problem identification and resolution crosscutting component of corrective action program, in that licensee failed to properly classify and evaluate a significant condition adverse to quality. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 10 CFR 50.59 Screenings on Scaffolds Installed for Greater than 90 Days The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on February 10, 2009, it was determined that 62 scaffolds that did not comply with the engineering installation specification had been in place in the three units in excess of 90 days, and that these scaffold installations had not been screened in accordance with 10 CFR 50.59, nor had these nonconforming conditions been evaluated for their potential impact on equipment operability. As immediate corrective action, Palo Verde Nuclear Generating Station informed the applicable control room operators of the 62 nonconforming conditions and operability assessments were performed under Palo Verde Action Requests 3283371, 3283489, and 3281680. Additionally, Palo Verde Nuclear Generating Station initiated Palo Verde Action Request 3283865 to perform 10 CFR 50.59 screenings on the 62 non-compliant scaffolds. The finding was more than minor because it is associated with the mitigating systems cornerstone attribute for protection against external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. The finding, associated with the mitigating systems cornerstone, was evaluated in accordance with Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," and determined to be of very low safety significance per the Significance Determination Process because the finding was not a design or qualification deficiency, did not represent a loss of a system/train safety function, and did not screen as potentially risk significant due to external events. The finding had a crosscutting aspect in the human performance component of resources because Palo Verde Nuclear Generating Station did not ensure that adequate personnel were assigned to ensure that long term scaffold installations remained compliant with applicable procedural requirements. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: VIO Violation Failure to Implement Adequate Design Controls The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to translate the design basis maximum condensate storage tank temperature requirements into procedures to ensure the plant is operated within its design basis. This issue was entered into the licensees corrective action program as Palo Verde Action Requests 3289578 and 3289530. This finding is greater than minor because it is associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding had crosscutting aspects associated with corrective action component of the problem identification and resolution area in that engineering personnel failed to thoroughly evaluate problems such that resolutions ensured that the problems were resolved. Inspection Report# : 2009006 (pdf)

Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct Related Degradation of Safety-Related Inverters The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality. Specifically, the licensee failed to incorporate industry and vendor recommended preventative maintenance requirements to prevent the age related degradation of safety-related inverter components. This finding was entered into the licensees corrective action program as Palo Verde Action Request 3291971. The inspectors determined that the failure to identify the necessary maintenance practices and take corrective actions prior to the 2008 inverter failures was a performance deficiency. This finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheets, the team determined that a Phase 2 analysis was required because the finding represented a loss of system safety function. A Phase 2/Phase 3 significance determination was performed by an NRC senior reactor analyst. Based on a bounding analysis, the analyst determined that the delta core damage frequency result was less than 1.0E-7/yr. This noncited violation was therefore determined to be of very low safety significance. This finding has a crosscutting aspect in the problem identification and resolution component of operating experience, in that the licensee failed to implement operating experience through changes to station procedures. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Safety Related Systems and Systems Important to Safety The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were properly reviewed for operability. Specifically, between December 21, 2006, and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions associated with the Confirmatory Action Letter to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because 9 of the 20 examples, reflective of current performance, were not thoroughly evaluated such that the resolutions address causes and extent of conditions, as necessary, including properly evaluating for operability conditions adverse to quality. Inspection Report# : 2009006 (pdf)

Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedures for Performing Operability Determinations The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were reviewed for operability. Specifically, between December 21, 2006 and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with resources because 11 of the 20 examples, reflective of current performance, were the result of inadequate procedural guidance governing the conduct of operability determinations to ensure that conditions adverse to quality are properly evaluated for their potential operability impacts. Inspection Report# : 2009006 (pdf) Significance: Dec 31, 2008 Identified By: NRC Item Type: FIN Finding Failure to Promptly Identify and Correct Degraded Hydrostatic Penetration Seals The inspectors identified a finding of Palo Verde Nuclear Generating Station Procedure 01DP 0AP10, "Corrective Action Program," Revision 1, for the failure of operations and engineering personnel to promptly identify and correct a condition adverse to quality. Specifically, between February 13, 2007 and July 18, 2008, operations and engineering personnel failed to identify and correct degraded hydrostatic flood penetration seals which provide protection to safety-related equipment during internal flooding events. This resulted in over 100 hydrostatic penetration seals in the control, diesel, and main steam support structure buildings being left degraded for greater than 12 months. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3264501. The finding is greater than minor because it is associated with the protection against external factors (i.e. flood hazard) attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because operations and engineering personnel failed to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008005 (pdf)

Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the RWT Instruments in a Timely Manner The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of the licensee to correct a deficiency associated with the refueling water tank instrument pit in a timely manner. Specifically, between June 16, 2006, and July 2, 2008, maintenance and engineering personnel failed to ensure the openings of the pit covers were adequately sealed to prevent rain water intrusion. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3194904. The performance deficiency associated with this finding involved the failure of maintenance personnel to correct a condition adverse to quality in a timely manner. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterizations of Findings," the finding required a Phase 3 analysis by a Senior Reactor Analyst, since the finding is potentially risk significant due to external initiating event core damage sequences. Based on the analysis performed, the analyst concluded that the finding had very low safety significance (Green) because of the very small probability of a large rainfall event and a loss of coolant accident occurring at the same time. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf) Significance: Dec 09, 2004 Identified By: NRC Item Type: VIO Violation FAILURE TO MAINTAIN DESIGN CONTROL OF CONTAINMENT SUMP RECIRCULATION PIPING The team identified an apparent violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure to establish measures to assure design basis information was translated into specifications, drawings, procedures, and instructions. Specifically, the licensee failed to maintain the safety injection sump suction piping full of water in accordance with the Updated Final Safety Analysis Report. This nonconformance had the potential to significantly affect the available net positive suction head described in the Updated Final Safety Analysis Report for the high pressure safety injection and containment spray pumps, since the analysis assumed the piping would be maintained full of water. {Note: Finding remains open - IP 95002 results pending 12/16/2005} This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. The NRC assessed this finding through Phase 3 of the Significance Determination Process and made a preliminary determination that the issue had substantial safety significance (Yellow). After considering the information developed during the inspection and the results of testing sponsored by the licensee, the NRC has concluded that this inspection finding is appropriately characterized as Yellow. The final Significance Determination Process letter was issued on April 8, 2005. This issue was inspected within the scope of a Supplemental 95002 Inspection in August - September 2005. {NOTE: Yellow finding remains open because the corrective actions taken in response to the root causes and related programmatic concerns involving questioning attitude, technical rigor, and operability determinations have not been fully effective. - IP 95002 Supplemental Inspection completed December 2005, IR 05000528/20050112, 05000529/20050112 and 05000530/2005012, IP 95002 Followup Supplemental Inspection completed August 2006, IR 05000528/2006010, 05000529/2006010 and 05000530/2006010} Inspection Report# : 2004014 (pdf) Inspection Report# : 2009006 (pdf)

Barrier Integrity Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedural Requirements to Implement Technical Specification 5.5.2.b The inspectors identified a non-cited violation of Technical Specification 5.5.2.b, "Primary Coolant Sources Outside Containment," for the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. Specifically, between January 8, 1993 and September 30, 2008, engineering personnel failed to ensure portions of the containment spray system, which could be in contact with radioactive fluids outside containment, were included in the integrated leak test requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3170965. The performance deficiency associated with this finding was the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. The finding is greater than minor because it is associated with the design control and procedural quality attribute associated with maintaining radiological barrier functionality for the auxiliary building of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the physical design barriers protect the public from radio nuclide releases caused by accidents or events. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance because it only represented a degradation of the radiological barrier function of the auxiliary building. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf) Emergency Preparedness Significance: Jun 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Risk Significant Planning Standard The inspectors identified a noncited violation (NCV) of 10 CFR 50.54(q) and 10 CFR Part 50, Appendix E.IV.F.2.g, for the licensees failure to correct an identified risk significant planning standard weakness between May 2, 2007 and October 28, 2007. Specifically, the licensee failed to implement adequate corrective actions for identified weaknesses in the ability to correctly make a Site Area Emergency declaration for a steam generator tube rupture event. This issue was entered into the licensees correction action program as Palo Verde Action Request 3083911. The NRC determined that the inability to consistently implement an Emergency Action Level was a performance deficiency within the licensees control. This finding is more than minor because it was associated with the Emergency Preparedness attribute of emergency response organization performance and affected the cornerstone objective to implement adequate measures to protect the health and safety of the public because the inability to properly recognize and classify an emergency condition affects the licensees ability to implement adequate protective measures. This finding was preliminarily determined to be of low to moderate safety significance. After consideration of information provided during and after a Regulatory Conference held on March 25, 2008, the NRC has concluded that the knowledge deficiency identified among senior operators would not likely result in an incorrect emergency classification during a steam generator tube rupture event, and the NRC has concluded the significance of the inspection finding is appropriately characterized as Green (i.e., a finding of very low safety significance). This violation is being treated as an NCV, consistent with Section VI of the NRC Enforcement Policy. The cause of this finding has crosscutting aspects associated with the corrective action aspect of the problem identification and

resolution area in that the licensee failed to thoroughly evaluate problems such that resolutions ensured correcting problems [P.1.(c)]. The cause of this finding was also related to the safety culture component of accountability in that the licensee failed to demonstrate a proper safety focus and reinforce safety principles [O.1.(c)]. Inspection Report# : 2008003 (pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : May 29, 2009

Palo Verde 3 2Q/2009 Plant Inspection Findings Initiating Events Significance: Jun 30, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadvertent Decrease of Pressurizer Level Due to Personnel Error A self-revealing non-cited violation of Technical Specification 5.4.1(a), "Procedures," was identified for the failure of operations personnel to follow procedural requirements during a planned plant startup. Specifically, on May 27, 2009, operations personnel did not take actions to lower turbine load after synchronizing the generator to the offsite electrical distribution grid during cooldown, causing a pressurizer low level alarm and a loss of pressurizer heaters. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3336555. The finding is more than minor because it is associated with the human performance attribute of the initiating events cornerstone and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in exceeding the technical specification limit for identified reactor coolant system leakage, did not affect other mitigation systems, did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of human performance associated with decision making because operations personnel failed to properly implement their roles in communicating between applicable operational personnel [H.1(a)]. Inspection Report# : 2009003 (pdf) Mitigating Systems Significance: Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Develop an Adequate Procedure to Ensure Operability of the Essential Cooling Water Heat Exchangers The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations, chemistry, and engineering personnel to develop a procedure with appropriate quantitative or qualitative acceptance criteria for chloride levels to ensure operability of the essential cooling water system heat exchangers. Specifically, from plant startup until April 28, 2009, chemistry personnels Policy CDP1-14, Chemistry Department Policies, stated, in part, that a Palo Verde Action Request will be generated for entry into any Action Level 1, 2, 3 or 5, and did not give actions for Action Level 4. This resulted in chlorides exceeding Action Level 4 quantitative acceptance criterion in the essential cooling water system Train A without a Palo Verde Action Request being generated, or an operability determination being performed in a timely manner. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3347097. The finding is more than minor because it is associated with the procedure quality attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding

did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision-making because decisions and the basis for decisions were not communicated to personnel who have a need to know the information in order to perform work safely, in a timely manner [H.1(c)]. Inspection Report# : 2009003 (pdf) Significance: SL-IV Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Written Safety Evaluation in Accordance with 10 CFR 50.59 for Refueling Water Tank Full Flow Recirculation The inspectors identified a non-cited Severity Level IV violation of 10 CFR 50.59 requirements for the failure of engineering personnel to perform adequate written safety evaluations prior to implementing changes to the emergency core cooling system. Specifically, between 1987 and February 2009, engineering personnel failed to obtained prior NRC approval for a change that involved two unreviewed safety questions involving emergency core cooling system operability and containment bypass leakage during an accident. The first example involved a change in an emergency core cooling system lineup that could have prevented the fulfillment of the safety functions of the safety injection system to remove residual heat and mitigate the consequences of an accident. The second example involved opening normally locked close valves, while the plant is operating, that could result in the loss of a safety function to control the release of radioactive material as a result of the containment bypass path. This issue was entered into the licensee's corrective action program as Condition Report / Disposition Request 3287805. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding is also more than minor because it is associated with the configuration control attribute of the Barrier Integrity cornerstone and adversely affects the cornerstone objective of providing reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the inspectors determined that traditional enforcement applied because this issue may have impacted the NRCs ability to perform its regulatory function, and should be evaluated using the traditional enforcement process. The issue was classified as Severity Level IV because the violation of 10 CFR 50.59 involved conditions evaluated as having very low safety significance by the Significance Determination Process. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding required a Phase 2 analysis because the finding represented a loss of safety system function of the safety injection system. The Phase 2 analysis determined that this finding was potentially greater than Green; therefore, a Phase 3 analysis was completed by a regional senior reactor analyst. The Phase 3 analysis determined that this issue was of very low safety significance based on the senior reactor analyst reviewing the licensee's risk estimate of the condition which concluded that the ICCDP was much less than 1.0E-7. The analyst checked portions of the licensee's analysis using the Palo Verde SPAR model, and found the licensee results to be acceptable. Therefore, the significance of the finding was determined to be very low (Green). This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009003 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: FIN Finding Failure to Correct Deficient Condition for the Essential Spray Pond Chemical Addition System Valves High Failure Rate The inspectors identified a finding for the failure of engineering and maintenance personnel to adequately implement timely corrective actions for deficiencies associated with the essential spray pond sodium hypochlorite chemical addition system. Specifically, between May 2006 and March 2009, corrective actions to replace degraded sodium

hypochlorite valves with a more reliable chemical addition system were not taken resulting in the Unit 2 spray pond Train A chemistry pH level being out of specification high on two occasions. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3277070. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely in a timely manner [H.1(c)]. Inspection Report# : 2009002 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Inspect or Test, and Repair Fire Penetration Seals The inspectors identified 5 examples of a non-cited violation of License Condition 2.C.(7), 2.C.(6), and 2.F for Unit 1, Unit 2, and Unit 3, respectively, for the failure of engineering and maintenance personnel to follow procedures to adequately inspect and repair fire penetration seals. Specifically, between 2004 and August 2008, engineering and maintenance personnel failed to inspect and repair fire penetration seals, which provide protection to safety-related equipment during fire events, resulting in the licensee declaring 4 fire penetration seals degraded and 1 non-functional. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3295124. The finding is more than minor because it was associated with the external factors attribute (i.e. fire) of the mitigating systems cornerstone and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process." Based on the analysis performed, the inspector concluded that the degradation of the fire barrier penetration seals represented a low degradation of the fire confinement element of the fire protection program, the degraded fire barrier penetration seals had no credible fire damage state, and that the fire ignition sources present could not damage the post-fire safe shutdown equipment, and therefore determined the finding to have very low safety significance. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues [P.1 (a)]. Inspection Report# : 2009002 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Evaluation for Potential Emergency Diesel Generator Slow Start Issue The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on November 8, 2008, Palo Verde Nuclear Generating Station did not adequately test the emergency diesel generator to verify that a newly identified emergency diesel generator governor issue, would not cause the emergency diesel generators start time to exceed the Technical Specification allowable limit of 10 seconds. Palo Verde Nuclear Generating Station did not specify testing requirements and acceptance criteria to ensure continued operability of the affected emergency diesel generators. As an immediate corrective action, Palo Verde Nuclear Generating Station reevaluated the issue and specified additional testing requirements with specific

acceptance criteria for the affected emergency diesel generators pending completion of a hardware modification that would eliminate the issue. The licensee documented this performance deficiency in Palo Verde Action Request 3280971. The finding was more than minor because, if left uncorrected, it had the potential to lead to a more significant safety concern; specifically, that emergency diesel generator start time in excess of the Technical Specification allowable maximum may not have been promptly identified. The finding is associated with the mitigating systems cornerstone. The finding was evaluated in accordance with Inspection Manual Chapter 0609.04, and determined to be of very low safety significance because the finding was confirmed not to result in loss of operability or functionality. The finding had a crosscutting aspect in the problem identification and resolution component of the corrective action program because Palo Verde Nuclear Generating Station did not thoroughly evaluate operability of the emergency diesel generators that remained susceptible to governor-related start time degradation [P.1.c]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedure for Screening Significant Condition Adverse to Quality The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures and Drawings, for the licensees failure to follow procedures for identifying the significance of a significant condition adverse to quality. Specifically, the Action Request Review Committee screened Palo Verde Action Request 3221258 as an adverse Condition Report Disposition Request, despite the fact that the Procedure 01DP-OAP12 required it to be screened as significant. This error resulted in the failure to understand the failure mode associated with a safety related essential cooling water pump such that corrective actions would prevent recurrence. The licensee documented the failure to properly screen this issue for significance in Palo Verde Action Request 3288713. The finding is more than minor because the finding is associated with the equipment performance attribute of the mitigating systems cornerstone, and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors utilized Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," to determine that the finding was of very low safety significance because it did not represent a design or qualification deficiency, did not result in a loss of safety function, or screen as a risk-significant external event. The cause of this finding is related to the problem identification and resolution crosscutting component of corrective action program, in that licensee failed to properly classify and evaluate a significant condition adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 10 CFR 50.59 Screenings on Scaffolds Installed for Greater than 90 Days The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on February 10, 2009, it was determined that 62 scaffolds that did not comply with the engineering installation specification had been in place in the three units in excess of 90 days, and that these scaffold installations had not been screened in accordance with 10 CFR 50.59, nor had these nonconforming conditions been evaluated for their potential impact on equipment operability. As immediate corrective action, Palo Verde Nuclear Generating Station informed the applicable control room operators of the 62 nonconforming conditions and operability assessments were performed under Palo Verde Action Requests 3283371, 3283489, and 3281680. Additionally, Palo Verde Nuclear Generating Station initiated Palo Verde Action Request 3283865 to perform 10 CFR 50.59 screenings on the 62 non-compliant scaffolds. The finding was more than minor because it is associated with the mitigating systems cornerstone attribute for

protection against external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. The finding, associated with the mitigating systems cornerstone, was evaluated in accordance with Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," and determined to be of very low safety significance per the Significance Determination Process because the finding was not a design or qualification deficiency, did not represent a loss of a system/train safety function, and did not screen as potentially risk significant due to external events. The finding had a crosscutting aspect in the human performance component of resources because Palo Verde Nuclear Generating Station did not ensure that adequate personnel were assigned to ensure that long term scaffold installations remained compliant with applicable procedural requirements [H.2.a]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: VIO Violation Failure to Implement Adequate Design Controls The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to translate the design basis maximum condensate storage tank temperature requirements into procedures to ensure the plant is operated within its design basis. This issue was entered into the licensees corrective action program as Palo Verde Action Requests 3289578 and 3289530. This finding is greater than minor because it is associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding had crosscutting aspects associated with corrective action component of the problem identification and resolution area in that engineering personnel failed to thoroughly evaluate problems such that resolutions ensured that the problems were resolved [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct Age-Related Degradation of Safety-Related Inverters The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality. Specifically, the licensee failed to incorporate industry and vendor recommended preventative maintenance requirements to prevent the age related degradation of safety-related inverter components. This finding was entered into the licensees corrective action program as Palo Verde Action Request 3291971. The inspectors determined that the failure to identify the necessary maintenance practices and take corrective actions prior to the 2008 inverter failures was a performance deficiency. This finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheets, the team determined that a Phase 2 analysis was required because the finding represented a loss of system safety function. A Phase 2/Phase 3 significance determination was performed by an NRC senior reactor analyst. Based on a bounding analysis, the analyst determined that the delta core damage frequency result was less than 1.0E-7/yr. This noncited violation was therefore determined to be of very low safety significance. This finding has a crosscutting aspect in the problem identification and resolution component of operating experience, in that the licensee failed to implement operating experience through changes to station procedures [P.2(b)].

Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Safety Related Systems and Systems Important to Safety The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were properly reviewed for operability. Specifically, between December 21, 2006, and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions associated with the Confirmatory Action Letter to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because 9 of the 20 examples, reflective of current performance, were not thoroughly evaluated such that the resolutions address causes and extent of conditions, as necessary, including properly evaluating for operability conditions adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedures for Performing Operability Determinations The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were reviewed for operability. Specifically, between December 21, 2006 and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with resources because 11 of the 20 examples, reflective of current performance, were the result of

inadequate procedural guidance governing the conduct of operability determinations to ensure that conditions adverse to quality are properly evaluated for their potential operability impacts [H.2(c)]. Inspection Report# : 2009006 (pdf) Significance: Dec 31, 2008 Identified By: NRC Item Type: FIN Finding Failure to Promptly Identify and Correct Degraded Hydrostatic Penetration Seals The inspectors identified a finding at Palo Verde Nuclear Generating Station Procedure 01DP-0AP10, "Corrective Action Program," Revision 1, for the failure of operations and engineering personnel to promptly identify and correct a condition adverse to quality. Specifically, between February 13, 2007 and July 18, 2008, operations and engineering personnel failed to identify and correct degraded hydrostatic flood penetration seals which provide protection to safety-related equipment during internal flooding events. This resulted in over 100 hydrostatic penetration seals in the control, diesel, and main steam support structure buildings being left degraded for greater than 12 months. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3264501. The finding is greater than minor because it is associated with the protection against external factors (i.e. flood hazard) attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because operations and engineering personnel failed to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008005 (pdf) Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the Refueling Water Tank Instruments in a Timely Manner The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action," for the failure of the licensee to correct a deficiency associated with the refueling water tank instrument pit in a timely manner. Specifically, between June 16, 2006, and July 2, 2008, maintenance and engineering personnel failed to ensure the openings of the pit covers were adequately sealed to prevent rain water intrusion. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3194904. The performance deficiency associated with this finding involved the failure of maintenance personnel to correct a condition adverse to quality in a timely manner. The finding is greater than minor because it is associated with the protection against external factors cornerstone attribute of the mitigating systems cornerstone and affects the associated cornerstone objective to ensure the reliability and availability of systems that respond to initiating events. Using the Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding required a Phase 3 analysis by a senior reactor analyst, since the finding is potentially risk significant due to external initiating event core damage sequences. Based on the analysis performed, the analyst concluded that the finding had very low safety significance (Green) because of the very small probability of a large rainfall event and a loss of coolant accident occurring at the same time. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf)

Barrier Integrity Significance: Sep 30, 2008 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedural Requirements to Implement Technical Specification 5.5.2.b The inspectors identified a noncited violation of Technical Specification 5.5.2.b, "Primary Coolant Sources Outside Containment," for the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. Specifically, between January 8, 1993, and September 30, 2008, engineering personnel failed to ensure portions of the containment spray system, which could be in contact with radioactive fluids outside containment, were included in the integrated leak test requirements. This issue was entered into the licensee's corrective action program as Condition Report/Disposition Request 3170965. The performance deficiency associated with this finding was the failure of engineering and maintenance personnel to implement a program to verify integrated leak test requirements for abandoned valves still connected to an active system. The finding is greater than minor because it is associated with the design control and procedural quality attribute associated with maintaining radiological barrier functionality for the auxiliary building of the barrier integrity cornerstone and affects the cornerstone objective to provide reasonable assurance that the physical design barriers protect the public from radio nuclide releases caused by accidents or events. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance because it only represented a degradation of the radiological barrier function of the auxiliary building. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2008004 (pdf) Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous

Significance: N/A Mar 13, 2009 Identified By: NRC Item Type: FIN Finding Assessment of PVNGS Corrective Action Program The team concluded that the implementation of the corrective action program at the Palo Verde Nuclear Generating Station was generally effective. Once entered into the system, items were screened and prioritized in a timely manner using established criteria. The station properly evaluated items entered into the corrective action program commensurate with their safety significance. Corrective actions addressed the identified causes. The team selected and reviewed approximately 350 risk-informed action requests, work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. The inspectors verified that the licensee had taken actions to address previous NRC findings. The team performed a five year review of the diesel generator performance and a focused review of inverter systems to determine whether problems were being effectively addressed and that the corrective action program was effective in identifying problems. As a result of these reviews, the team concluded that when site personnel identified problems, they entered them into the corrective action program at a low threshold; however, the team identified several issues with the quality of evaluations and linking of corrective action documents. Corrective actions were generally implemented in a timely manner, although the team identified several corrective actions associated with conditions adverse to quality that were not completed in a timely manner. The team also identified that operability assessments and reportability reviews were not being implemented consistent with procedural guidance and, although the equipment remained operable, many of these assessments did not demonstrate the appropriate level of technical rigor to support conclusions made for operability. The team determined that in most cases the licensee identified, reviewed, and applied industry operating experience relevant to the facility, and had entered applicable items into the corrective action program. The team noted that the licensee was evaluating industry operating experience when performing root cause and apparent cause evaluations. The team also noted that Quality Assurance audits and other self-assessment activities were generally effective. Based on 34 interviews conducted during this inspection, observations of plant activities, and reviews of the corrective action and nuclear safety concerns programs, the team determined that site personnel were willing to raise safety issues and document them in the corrective action program. The team observed that workers at the site felt free to report problems to their management, and were willing to use the Employee Concerns Program. Inspection Report# : 2009006 (pdf) Last modified : August 31, 2009

Palo Verde 3 3Q/2009 Plant Inspection Findings Initiating Events Significance: Jun 30, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadvertent Decrease of Pressurizer Level Due to Personnel Error A self-revealing non-cited violation of Technical Specification 5.4.1(a), "Procedures," was identified for the failure of operations personnel to follow procedural requirements during a planned plant startup. Specifically, on May 27, 2009, operations personnel did not take actions to lower turbine load after synchronizing the generator to the offsite electrical distribution grid during cooldown, causing a pressurizer low level alarm and a loss of pressurizer heaters. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3336555. The finding is more than minor because it is associated with the human performance attribute of the initiating events cornerstone and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in exceeding the technical specification limit for identified reactor coolant system leakage, did not affect other mitigation systems, did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of human performance associated with decision making because operations personnel failed to properly implement their roles in communicating between applicable operational personnel [H.1(a)]. Inspection Report# : 2009003 (pdf) Mitigating Systems Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the Emergency Diesel Generator Train A K-4 Relay in a Timely Manner The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a deficiency associated with the emergency diesel generator voltage regulator K-4 relay in a timely manner. Specifically, on October 16, 2004, maintenance personnel identified that the K-4 relay had a high resistance of approximately 800 ohms but did not replace the relay as required by procedures. This resulted in the failure of the emergency diesel generator to start following maintenance activities on May 7, 2009. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3385257. The finding is more than minor because it is associated with equipment performance attribute of the Mitigating Systems Cornerstone and affects the associated cornerstone objective to ensure the reliability and capability of systems that respond to initiating events. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to require a Phase 2 and Phase 3 analysis by a senior reactor analyst, because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Based on the analysis performed, the analyst concluded that the finding had very low safety significance because with only three failures of the K-4 relay in approximately 170 starts and crediting seven hours for the station batteries during a loss of offsite power event, the resulting core damage frequency

is 3.8E-7. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009004 (pdf) Significance: Aug 12, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Foreign Material Exclusion Requirements The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure to adequately implement foreign material controls during maintenance. Specifically, on May 21, 2008, maintenance and quality control personnel failed to ensure that no foreign material entered the fuel injection pump 7R during refurbishment. As a result, fuel injection pump 7R seized in place, rendering emergency diesel generator 3A inoperable and unavailable for 31.5 days. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3280474. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require a Phase 2 analysis because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Using the Palo Verde pre-solved sequences and an exposure time of 3 to 30 days with one emergency diesel generator unavailable, the Phase 2 estimation determined this finding was of low to moderate significance. With credit for battery operation for seven hours, the Phase 3 analysis determined that the total delta core damage frequency from all of the combined scenarios was 5 E-7; and thus, the finding was considered to be of very low safety significance (Green). This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely, in a timely manner [H.1(c)] Inspection Report# : 2009010 (pdf) Significance: Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Develop an Adequate Procedure to Ensure Operability of the Essential Cooling Water Heat Exchangers The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations, chemistry, and engineering personnel to develop a procedure with appropriate quantitative or qualitative acceptance criteria for chloride levels to ensure operability of the essential cooling water system heat exchangers. Specifically, from plant startup until April 28, 2009, chemistry personnels Policy CDP1-14, Chemistry Department Policies, stated, in part, that a Palo Verde Action Request will be generated for entry into any Action Level 1, 2, 3 or 5, and did not give actions for Action Level 4. This resulted in chlorides exceeding Action Level 4 quantitative acceptance criterion in the essential cooling water system Train A without a Palo Verde Action Request being generated, or an operability determination being performed in a timely manner. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3347097. The finding is more than minor because it is associated with the procedure quality attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision-making because decisions and the basis for decisions were not communicated to personnel who have a

need to know the information in order to perform work safely, in a timely manner [H.1(c)]. Inspection Report# : 2009003 (pdf) Significance: SL-IV Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Written Safety Evaluation in Accordance with 10 CFR 50.59 for Refueling Water Tank Full Flow Recirculation The inspectors identified a non-cited Severity Level IV violation of 10 CFR 50.59 requirements for the failure of engineering personnel to perform adequate written safety evaluations prior to implementing changes to the emergency core cooling system. Specifically, between 1987 and February 2009, engineering personnel failed to obtained prior NRC approval for a change that involved two unreviewed safety questions involving emergency core cooling system operability and containment bypass leakage during an accident. The first example involved a change in an emergency core cooling system lineup that could have prevented the fulfillment of the safety functions of the safety injection system to remove residual heat and mitigate the consequences of an accident. The second example involved opening normally locked close valves, while the plant is operating, that could result in the loss of a safety function to control the release of radioactive material as a result of the containment bypass path. This issue was entered into the licensee's corrective action program as Condition Report / Disposition Request 3287805. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding is also more than minor because it is associated with the configuration control attribute of the Barrier Integrity cornerstone and adversely affects the cornerstone objective of providing reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the inspectors determined that traditional enforcement applied because this issue may have impacted the NRCs ability to perform its regulatory function, and should be evaluated using the traditional enforcement process. The issue was classified as Severity Level IV because the violation of 10 CFR 50.59 involved conditions evaluated as having very low safety significance by the Significance Determination Process. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding required a Phase 2 analysis because the finding represented a loss of safety system function of the safety injection system. The Phase 2 analysis determined that this finding was potentially greater than Green; therefore, a Phase 3 analysis was completed by a regional senior reactor analyst. The Phase 3 analysis determined that this issue was of very low safety significance based on the senior reactor analyst reviewing the licensee's risk estimate of the condition which concluded that the ICCDP was much less than 1.0E-7. The analyst checked portions of the licensee's analysis using the Palo Verde SPAR model, and found the licensee results to be acceptable. Therefore, the significance of the finding was determined to be very low (Green). This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009003 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: FIN Finding Failure to Correct Deficient Condition for the Essential Spray Pond Chemical Addition System Valves High Failure Rate The inspectors identified a finding for the failure of engineering and maintenance personnel to adequately implement timely corrective actions for deficiencies associated with the essential spray pond sodium hypochlorite chemical addition system. Specifically, between May 2006 and March 2009, corrective actions to replace degraded sodium hypochlorite valves with a more reliable chemical addition system were not taken resulting in the Unit 2 spray pond Train A chemistry pH level being out of specification high on two occasions. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3277070. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating

systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely in a timely manner [H.1(c)]. Inspection Report# : 2009002 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Inspect or Test, and Repair Fire Penetration Seals The inspectors identified 5 examples of a non-cited violation of License Condition 2.C.(7), 2.C.(6), and 2.F for Unit 1, Unit 2, and Unit 3, respectively, for the failure of engineering and maintenance personnel to follow procedures to adequately inspect and repair fire penetration seals. Specifically, between 2004 and August 2008, engineering and maintenance personnel failed to inspect and repair fire penetration seals, which provide protection to safety-related equipment during fire events, resulting in the licensee declaring 4 fire penetration seals degraded and 1 non-functional. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3295124. The finding is more than minor because it was associated with the external factors attribute (i.e. fire) of the mitigating systems cornerstone and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process." Based on the analysis performed, the inspector concluded that the degradation of the fire barrier penetration seals represented a low degradation of the fire confinement element of the fire protection program, the degraded fire barrier penetration seals had no credible fire damage state, and that the fire ignition sources present could not damage the post-fire safe shutdown equipment, and therefore determined the finding to have very low safety significance. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues [P.1 (a)]. Inspection Report# : 2009002 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Evaluation for Potential Emergency Diesel Generator Slow Start Issue The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on November 8, 2008, Palo Verde Nuclear Generating Station did not adequately test the emergency diesel generator to verify that a newly identified emergency diesel generator governor issue, would not cause the emergency diesel generators start time to exceed the Technical Specification allowable limit of 10 seconds. Palo Verde Nuclear Generating Station did not specify testing requirements and acceptance criteria to ensure continued operability of the affected emergency diesel generators. As an immediate corrective action, Palo Verde Nuclear Generating Station reevaluated the issue and specified additional testing requirements with specific acceptance criteria for the affected emergency diesel generators pending completion of a hardware modification that would eliminate the issue. The licensee documented this performance deficiency in Palo Verde Action Request 3280971. The finding was more than minor because, if left uncorrected, it had the potential to lead to a more significant safety concern; specifically, that emergency diesel generator start time in excess of the Technical Specification allowable

maximum may not have been promptly identified. The finding is associated with the mitigating systems cornerstone. The finding was evaluated in accordance with Inspection Manual Chapter 0609.04, and determined to be of very low safety significance because the finding was confirmed not to result in loss of operability or functionality. The finding had a crosscutting aspect in the problem identification and resolution component of the corrective action program because Palo Verde Nuclear Generating Station did not thoroughly evaluate operability of the emergency diesel generators that remained susceptible to governor-related start time degradation [P.1.c]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedure for Screening Significant Condition Adverse to Quality The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures and Drawings, for the licensees failure to follow procedures for identifying the significance of a significant condition adverse to quality. Specifically, the Action Request Review Committee screened Palo Verde Action Request 3221258 as an adverse Condition Report Disposition Request, despite the fact that the Procedure 01DP-OAP12 required it to be screened as significant. This error resulted in the failure to understand the failure mode associated with a safety related essential cooling water pump such that corrective actions would prevent recurrence. The licensee documented the failure to properly screen this issue for significance in Palo Verde Action Request 3288713. The finding is more than minor because the finding is associated with the equipment performance attribute of the mitigating systems cornerstone, and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors utilized Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," to determine that the finding was of very low safety significance because it did not represent a design or qualification deficiency, did not result in a loss of safety function, or screen as a risk-significant external event. The cause of this finding is related to the problem identification and resolution crosscutting component of corrective action program, in that licensee failed to properly classify and evaluate a significant condition adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 10 CFR 50.59 Screenings on Scaffolds Installed for Greater than 90 Days The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on February 10, 2009, it was determined that 62 scaffolds that did not comply with the engineering installation specification had been in place in the three units in excess of 90 days, and that these scaffold installations had not been screened in accordance with 10 CFR 50.59, nor had these nonconforming conditions been evaluated for their potential impact on equipment operability. As immediate corrective action, Palo Verde Nuclear Generating Station informed the applicable control room operators of the 62 nonconforming conditions and operability assessments were performed under Palo Verde Action Requests 3283371, 3283489, and 3281680. Additionally, Palo Verde Nuclear Generating Station initiated Palo Verde Action Request 3283865 to perform 10 CFR 50.59 screenings on the 62 non-compliant scaffolds. The finding was more than minor because it is associated with the mitigating systems cornerstone attribute for protection against external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. The finding, associated with the mitigating systems cornerstone, was evaluated in accordance with Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," and determined to be of very low safety significance per the Significance Determination Process because the finding was not a design or qualification deficiency, did not represent a loss of a system/train safety function, and did not screen as potentially risk significant due to external events. The finding had a crosscutting aspect in the human performance component of resources because Palo Verde Nuclear

Generating Station did not ensure that adequate personnel were assigned to ensure that long term scaffold installations remained compliant with applicable procedural requirements [H.2.a]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: VIO Violation Failure to Implement Adequate Design Controls The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to translate the design basis maximum condensate storage tank temperature requirements into procedures to ensure the plant is operated within its design basis. This issue was entered into the licensees corrective action program as Palo Verde Action Requests 3289578 and 3289530. This finding is greater than minor because it is associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding had crosscutting aspects associated with corrective action component of the problem identification and resolution area in that engineering personnel failed to thoroughly evaluate problems such that resolutions ensured that the problems were resolved [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct Age-Related Degradation of Safety-Related Inverters The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality. Specifically, the licensee failed to incorporate industry and vendor recommended preventative maintenance requirements to prevent the age related degradation of safety-related inverter components. This finding was entered into the licensees corrective action program as Palo Verde Action Request 3291971. The inspectors determined that the failure to identify the necessary maintenance practices and take corrective actions prior to the 2008 inverter failures was a performance deficiency. This finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheets, the team determined that a Phase 2 analysis was required because the finding represented a loss of system safety function. A Phase 2/Phase 3 significance determination was performed by an NRC senior reactor analyst. Based on a bounding analysis, the analyst determined that the delta core damage frequency result was less than 1.0E-7/yr. This noncited violation was therefore determined to be of very low safety significance. This finding has a crosscutting aspect in the problem identification and resolution component of operating experience, in that the licensee failed to implement operating experience through changes to station procedures [P.2(b)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Safety Related Systems and Systems Important to Safety

The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were properly reviewed for operability. Specifically, between December 21, 2006, and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions associated with the Confirmatory Action Letter to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because 9 of the 20 examples, reflective of current performance, were not thoroughly evaluated such that the resolutions address causes and extent of conditions, as necessary, including properly evaluating for operability conditions adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedures for Performing Operability Determinations The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were reviewed for operability. Specifically, between December 21, 2006 and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with resources because 11 of the 20 examples, reflective of current performance, were the result of inadequate procedural guidance governing the conduct of operability determinations to ensure that conditions adverse to quality are properly evaluated for their potential operability impacts [H.2(c)]. Inspection Report# : 2009006 (pdf) Significance: Dec 31, 2008 Identified By: NRC Item Type: FIN Finding

Failure to Promptly Identify and Correct Degraded Hydrostatic Penetration Seals The inspectors identified a finding at Palo Verde Nuclear Generating Station Procedure 01DP-0AP10, "Corrective Action Program," Revision 1, for the failure of operations and engineering personnel to promptly identify and correct a condition adverse to quality. Specifically, between February 13, 2007 and July 18, 2008, operations and engineering personnel failed to identify and correct degraded hydrostatic flood penetration seals which provide protection to safety-related equipment during internal flooding events. This resulted in over 100 hydrostatic penetration seals in the control, diesel, and main steam support structure buildings being left degraded for greater than 12 months. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3264501. The finding is greater than minor because it is associated with the protection against external factors (i.e. flood hazard) attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience because operations and engineering personnel failed to implement and institutionalize operating experience through changes to station processes, procedures, equipment, and training programs [P.2(b)]. Inspection Report# : 2008005 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Mar 13, 2009 Identified By: NRC Item Type: FIN Finding

Assessment of PVNGS Corrective Action Program The team concluded that the implementation of the corrective action program at the Palo Verde Nuclear Generating Station was generally effective. Once entered into the system, items were screened and prioritized in a timely manner using established criteria. The station properly evaluated items entered into the corrective action program commensurate with their safety significance. Corrective actions addressed the identified causes. The team selected and reviewed approximately 350 risk-informed action requests, work orders, associated root and apparent cause evaluations, and other supporting documentation to assess problem identification and resolution activities. The inspectors verified that the licensee had taken actions to address previous NRC findings. The team performed a five year review of the diesel generator performance and a focused review of inverter systems to determine whether problems were being effectively addressed and that the corrective action program was effective in identifying problems. As a result of these reviews, the team concluded that when site personnel identified problems, they entered them into the corrective action program at a low threshold; however, the team identified several issues with the quality of evaluations and linking of corrective action documents. Corrective actions were generally implemented in a timely manner, although the team identified several corrective actions associated with conditions adverse to quality that were not completed in a timely manner. The team also identified that operability assessments and reportability reviews were not being implemented consistent with procedural guidance and, although the equipment remained operable, many of these assessments did not demonstrate the appropriate level of technical rigor to support conclusions made for operability. The team determined that in most cases the licensee identified, reviewed, and applied industry operating experience relevant to the facility, and had entered applicable items into the corrective action program. The team noted that the licensee was evaluating industry operating experience when performing root cause and apparent cause evaluations. The team also noted that Quality Assurance audits and other self-assessment activities were generally effective. Based on 34 interviews conducted during this inspection, observations of plant activities, and reviews of the corrective action and nuclear safety concerns programs, the team determined that site personnel were willing to raise safety issues and document them in the corrective action program. The team observed that workers at the site felt free to report problems to their management, and were willing to use the Employee Concerns Program. Inspection Report# : 2009006 (pdf) Last modified : December 10, 2009

Palo Verde 3 4Q/2009 Plant Inspection Findings Initiating Events Significance: Jun 30, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadvertent Decrease of Pressurizer Level Due to Personnel Error A self-revealing non-cited violation of Technical Specification 5.4.1(a), "Procedures," was identified for the failure of operations personnel to follow procedural requirements during a planned plant startup. Specifically, on May 27, 2009, operations personnel did not take actions to lower turbine load after synchronizing the generator to the offsite electrical distribution grid during cooldown, causing a pressurizer low level alarm and a loss of pressurizer heaters. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3336555. The finding is more than minor because it is associated with the human performance attribute of the initiating events cornerstone and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in exceeding the technical specification limit for identified reactor coolant system leakage, did not affect other mitigation systems, did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of human performance associated with decision making because operations personnel failed to properly implement their roles in communicating between applicable operational personnel [H.1(a)]. Inspection Report# : 2009003 (pdf) Mitigating Systems Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the Emergency Diesel Generator Train A K-4 Relay in a Timely Manner The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a deficiency associated with the emergency diesel generator voltage regulator K-4 relay in a timely manner. Specifically, on October 16, 2004, maintenance personnel identified that the K-4 relay had a high resistance of approximately 800 ohms but did not replace the relay as required by procedures. This resulted in the failure of the emergency diesel generator to start following maintenance activities on May 7, 2009. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3385257. The finding is more than minor because it is associated with equipment performance attribute of the Mitigating Systems Cornerstone and affects the associated cornerstone objective to ensure the reliability and capability of systems that respond to initiating events. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to require a Phase 2 and Phase 3 analysis by a senior reactor analyst, because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Based on the analysis performed, the analyst concluded that the finding had very low safety significance because with only three failures of the K-4 relay in approximately 170 starts and crediting seven hours for the station batteries during a loss of offsite power event, the resulting core damage frequency

is 3.8E-7. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009004 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Corrective Actions for Vaults Containing Station Blackout Cables The team identified a noncited violation of very low safety significance for failure to effectively implement the corrective action requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 8, Corrective Action, which were adopted by the licensee in order to meet 10 CFR 50.63, Loss of All Alternating Current. Although the licensee started a vault monitoring program for water intrusion in vaults with electrical cables in 2003, the effort to prevent exposure of medium voltage cables to submerged conditions has been ineffective for certain vaults that contain the 15kV station blackout generator output cables. Additionally, there are 27 splices in these cables which have contributed to cable test failures in previous meggar resistance tests that, in some cases, required splice replacement in order to pass resistance tests. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3350712, 3350713, 3350939, and 3352858. This finding is more than minor because it is associated with the design control and equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The finding was reviewed for crosscutting aspects and none were identified. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform an Adequate Operability Evaluation for the Condensate Storage Tank The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform an adequate operability evaluation for the condensate storage tank as required by site procedures. Specifically, upon discovery of the condition, the licensee performed an immediate operability determination evaluation based on concerns with the capability of the loop seal to provide protection from vacuum conditions. Subsequently, the licensee performed additional assessments of their overall program which included the specified operability evaluation in a component design bases review and closure of a confirmatory action letter and failed to identify the inadequacy. During the inspection, the team reviewed the operability determination and identified that the licensee failed to consider or identify concerns with the ability of the condensate storage tank pressure relief valves to operate after a design basis earthquake. The licensee entered this issue into their corrective action program as Palo Verde Action Request 3353683. This finding is more than minor because it is associated with the protection against external events (seismic) attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated

with the corrective action program since the licensee failed to properly evaluate for operability. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Incorporate Vendor Information for Reactor Trip Breakers The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, with programmatic implications for the licensee's failure to follow site procedures and incorporate updated vendor information for the reactor trip breakers. Specifically, the licensee failed to incorporate an updated revision of the maintenance program manual and at least two technical bulletins from the reactor trip breaker vendor. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3354252 and 3355082. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience since the licensee failed to implement changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2009008 (pdf) Significance: Aug 12, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Foreign Material Exclusion Requirements The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure to adequately implement foreign material controls during maintenance. Specifically, on May 21, 2008, maintenance and quality control personnel failed to ensure that no foreign material entered the fuel injection pump 7R during refurbishment. As a result, fuel injection pump 7R seized in place, rendering emergency diesel generator 3A inoperable and unavailable for 31.5 days. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3280474. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require a Phase 2 analysis because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Using the Palo Verde pre-solved sequences and an exposure time of 3 to 30 days with one emergency diesel generator unavailable, the Phase 2 estimation determined this finding was of low to moderate significance. With credit for battery operation for seven hours, the Phase 3 analysis determined that the total delta core damage frequency from all of the combined scenarios was 5 E-7; and thus, the finding was considered to be of very low safety significance (Green). This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely, in a timely manner [H.1(c)] Inspection Report# : 2009010 (pdf)

Significance: Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Develop an Adequate Procedure to Ensure Operability of the Essential Cooling Water Heat Exchangers The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations, chemistry, and engineering personnel to develop a procedure with appropriate quantitative or qualitative acceptance criteria for chloride levels to ensure operability of the essential cooling water system heat exchangers. Specifically, from plant startup until April 28, 2009, chemistry personnels Policy CDP1-14, Chemistry Department Policies, stated, in part, that a Palo Verde Action Request will be generated for entry into any Action Level 1, 2, 3 or 5, and did not give actions for Action Level 4. This resulted in chlorides exceeding Action Level 4 quantitative acceptance criterion in the essential cooling water system Train A without a Palo Verde Action Request being generated, or an operability determination being performed in a timely manner. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3347097. The finding is more than minor because it is associated with the procedure quality attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision-making because decisions and the basis for decisions were not communicated to personnel who have a need to know the information in order to perform work safely, in a timely manner [H.1(c)]. Inspection Report# : 2009003 (pdf) Significance: SL-IV Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Written Safety Evaluation in Accordance with 10 CFR 50.59 for Refueling Water Tank Full Flow Recirculation The inspectors identified a non-cited Severity Level IV violation of 10 CFR 50.59 requirements for the failure of engineering personnel to perform adequate written safety evaluations prior to implementing changes to the emergency core cooling system. Specifically, between 1987 and February 2009, engineering personnel failed to obtained prior NRC approval for a change that involved two unreviewed safety questions involving emergency core cooling system operability and containment bypass leakage during an accident. The first example involved a change in an emergency core cooling system lineup that could have prevented the fulfillment of the safety functions of the safety injection system to remove residual heat and mitigate the consequences of an accident. The second example involved opening normally locked close valves, while the plant is operating, that could result in the loss of a safety function to control the release of radioactive material as a result of the containment bypass path. This issue was entered into the licensee's corrective action program as Condition Report / Disposition Request 3287805. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding is also more than minor because it is associated with the configuration control attribute of the Barrier Integrity cornerstone and adversely affects the cornerstone objective of providing reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the inspectors determined that traditional enforcement applied because this issue may have impacted the NRCs ability to perform its regulatory function, and should be evaluated using the traditional enforcement process. The issue was classified as Severity Level IV because the violation of 10 CFR 50.59 involved conditions evaluated as having very low safety significance by the Significance Determination Process. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding required a Phase 2 analysis because the finding represented a loss of safety

system function of the safety injection system. The Phase 2 analysis determined that this finding was potentially greater than Green; therefore, a Phase 3 analysis was completed by a regional senior reactor analyst. The Phase 3 analysis determined that this issue was of very low safety significance based on the senior reactor analyst reviewing the licensee's risk estimate of the condition which concluded that the ICCDP was much less than 1.0E-7. The analyst checked portions of the licensee's analysis using the Palo Verde SPAR model, and found the licensee results to be acceptable. Therefore, the significance of the finding was determined to be very low (Green). This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009003 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: FIN Finding Failure to Correct Deficient Condition for the Essential Spray Pond Chemical Addition System Valves High Failure Rate The inspectors identified a finding for the failure of engineering and maintenance personnel to adequately implement timely corrective actions for deficiencies associated with the essential spray pond sodium hypochlorite chemical addition system. Specifically, between May 2006 and March 2009, corrective actions to replace degraded sodium hypochlorite valves with a more reliable chemical addition system were not taken resulting in the Unit 2 spray pond Train A chemistry pH level being out of specification high on two occasions. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3277070. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely in a timely manner [H.1(c)]. Inspection Report# : 2009002 (pdf) Significance: Mar 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Inspect or Test, and Repair Fire Penetration Seals The inspectors identified 5 examples of a non-cited violation of License Condition 2.C.(7), 2.C.(6), and 2.F for Unit 1, Unit 2, and Unit 3, respectively, for the failure of engineering and maintenance personnel to follow procedures to adequately inspect and repair fire penetration seals. Specifically, between 2004 and August 2008, engineering and maintenance personnel failed to inspect and repair fire penetration seals, which provide protection to safety-related equipment during fire events, resulting in the licensee declaring 4 fire penetration seals degraded and 1 non-functional. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3295124. The finding is more than minor because it was associated with the external factors attribute (i.e. fire) of the mitigating systems cornerstone and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require additional evaluation under Inspection Manual Chapter 0609, Appendix F, "Fire Protection Significance Determination Process." Based on the analysis performed, the inspector concluded that the degradation of the fire barrier penetration seals represented a low degradation of the fire confinement element of the fire protection program, the degraded fire barrier penetration seals had no credible fire damage state, and that the fire ignition sources present could not damage the post-fire safe shutdown equipment, and therefore determined the finding to have very low safety significance. This finding has a

crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues [P.1 (a)]. Inspection Report# : 2009002 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Evaluation for Potential Emergency Diesel Generator Slow Start Issue The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on November 8, 2008, Palo Verde Nuclear Generating Station did not adequately test the emergency diesel generator to verify that a newly identified emergency diesel generator governor issue, would not cause the emergency diesel generators start time to exceed the Technical Specification allowable limit of 10 seconds. Palo Verde Nuclear Generating Station did not specify testing requirements and acceptance criteria to ensure continued operability of the affected emergency diesel generators. As an immediate corrective action, Palo Verde Nuclear Generating Station reevaluated the issue and specified additional testing requirements with specific acceptance criteria for the affected emergency diesel generators pending completion of a hardware modification that would eliminate the issue. The licensee documented this performance deficiency in Palo Verde Action Request 3280971. The finding was more than minor because, if left uncorrected, it had the potential to lead to a more significant safety concern; specifically, that emergency diesel generator start time in excess of the Technical Specification allowable maximum may not have been promptly identified. The finding is associated with the mitigating systems cornerstone. The finding was evaluated in accordance with Inspection Manual Chapter 0609.04, and determined to be of very low safety significance because the finding was confirmed not to result in loss of operability or functionality. The finding had a crosscutting aspect in the problem identification and resolution component of the corrective action program because Palo Verde Nuclear Generating Station did not thoroughly evaluate operability of the emergency diesel generators that remained susceptible to governor-related start time degradation [P.1.c]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedure for Screening Significant Condition Adverse to Quality The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures and Drawings, for the licensees failure to follow procedures for identifying the significance of a significant condition adverse to quality. Specifically, the Action Request Review Committee screened Palo Verde Action Request 3221258 as an adverse Condition Report Disposition Request, despite the fact that the Procedure 01DP-OAP12 required it to be screened as significant. This error resulted in the failure to understand the failure mode associated with a safety related essential cooling water pump such that corrective actions would prevent recurrence. The licensee documented the failure to properly screen this issue for significance in Palo Verde Action Request 3288713. The finding is more than minor because the finding is associated with the equipment performance attribute of the mitigating systems cornerstone, and affects the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors utilized Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," to determine that the finding was of very low safety significance because it did not represent a design or qualification deficiency, did not result in a loss of safety function, or screen as a risk-significant external event. The cause of this finding is related to the problem identification and resolution crosscutting component of corrective action program, in that licensee failed to properly classify and evaluate a significant condition adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf)

Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 10 CFR 50.59 Screenings on Scaffolds Installed for Greater than 90 Days The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," when, on February 10, 2009, it was determined that 62 scaffolds that did not comply with the engineering installation specification had been in place in the three units in excess of 90 days, and that these scaffold installations had not been screened in accordance with 10 CFR 50.59, nor had these nonconforming conditions been evaluated for their potential impact on equipment operability. As immediate corrective action, Palo Verde Nuclear Generating Station informed the applicable control room operators of the 62 nonconforming conditions and operability assessments were performed under Palo Verde Action Requests 3283371, 3283489, and 3281680. Additionally, Palo Verde Nuclear Generating Station initiated Palo Verde Action Request 3283865 to perform 10 CFR 50.59 screenings on the 62 non-compliant scaffolds. The finding was more than minor because it is associated with the mitigating systems cornerstone attribute for protection against external factors and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. The finding, associated with the mitigating systems cornerstone, was evaluated in accordance with Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," and determined to be of very low safety significance per the Significance Determination Process because the finding was not a design or qualification deficiency, did not represent a loss of a system/train safety function, and did not screen as potentially risk significant due to external events. The finding had a crosscutting aspect in the human performance component of resources because Palo Verde Nuclear Generating Station did not ensure that adequate personnel were assigned to ensure that long term scaffold installations remained compliant with applicable procedural requirements [H.2.a]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: VIO Violation Failure to Implement Adequate Design Controls The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the failure of engineering personnel to translate the design basis maximum condensate storage tank temperature requirements into procedures to ensure the plant is operated within its design basis. This issue was entered into the licensees corrective action program as Palo Verde Action Requests 3289578 and 3289530. This finding is greater than minor because it is associated with the mitigating systems cornerstone attribute of equipment performance and affected the cornerstone objective of ensuring the availability and reliability of systems that respond to initiating events to prevent undesirable consequences. Using the Inspection Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding is determined to have very low safety significance since it only affected the mitigating systems cornerstone and did not represent a loss of system safety function. The cause of this finding had crosscutting aspects associated with corrective action component of the problem identification and resolution area in that engineering personnel failed to thoroughly evaluate problems such that resolutions ensured that the problems were resolved [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct Age-Related Degradation of Safety-Related Inverters The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality. Specifically, the licensee failed to incorporate industry and vendor recommended preventative maintenance requirements to prevent the age related

degradation of safety-related inverter components. This finding was entered into the licensees corrective action program as Palo Verde Action Request 3291971. The inspectors determined that the failure to identify the necessary maintenance practices and take corrective actions prior to the 2008 inverter failures was a performance deficiency. This finding is more than minor because it affects the equipment performance attribute of the mitigating systems cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Inspection Manual Chapter 0609, "Significance Determination Process," Phase 1 worksheets, the team determined that a Phase 2 analysis was required because the finding represented a loss of system safety function. A Phase 2/Phase 3 significance determination was performed by an NRC senior reactor analyst. Based on a bounding analysis, the analyst determined that the delta core damage frequency result was less than 1.0E-7/yr. This noncited violation was therefore determined to be of very low safety significance. This finding has a crosscutting aspect in the problem identification and resolution component of operating experience, in that the licensee failed to implement operating experience through changes to station procedures [P.2(b)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Properly Implement Corrective Action Process for Potential Operability Issues with the Safety Related Systems and Systems Important to Safety The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were properly reviewed for operability. Specifically, between December 21, 2006, and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions associated with the Confirmatory Action Letter to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because 9 of the 20 examples, reflective of current performance, were not thoroughly evaluated such that the resolutions address causes and extent of conditions, as necessary, including properly evaluating for operability conditions adverse to quality [P.1(c)]. Inspection Report# : 2009006 (pdf) Significance: Feb 27, 2009 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Procedures for Performing Operability Determinations The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow the corrective action program to ensure that degraded and nonconforming conditions associated with safety related systems and systems important to safety were reviewed for operability. Specifically, between December 21, 2006 and January 30, 2009, operations personnel failed to perform adequate operability determinations of Palo Verde Action Requests associated with the component design

basis review project and other site projects, resulting in 97 Palo Verde Action Requests that either needed an immediate operability determination or a functional assessment, or needed more information to provide reasonable assurance of operability. Of the 97 examples 20 occurred following implementation of corrective actions to improve this process and therefore are reflective of current performance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3281099. The finding is greater than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its Technical Specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with resources because 11 of the 20 examples, reflective of current performance, were the result of inadequate procedural guidance governing the conduct of operability determinations to ensure that conditions adverse to quality are properly evaluated for their potential operability impacts [H.2(c)]. Inspection Report# : 2009006 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : March 01, 2010

Palo Verde 3 1Q/2010 Plant Inspection Findings Initiating Events Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: FIN Finding Failure to Take Corrective Actions for an Identified Adverse Condition A self-revealing finding was identified for the failure of engineering personnel to follow procedures and adequately evaluate an identified adverse condition for corrective actions associated with containment isolation valve UV002 as required by Procedure 90DP-0IP10, Condition Reporting and Procedure 86DP-0EE01, Reliability Centered Maintenance Based System Reviews. Specifically, the licensee identified during a cause analysis performed in 1997 and by a system review conducted in 2004 and 2007 that the failure of containment isolation valve UV002 could result in a reactor trip, but failed to take any corrective actions. This issue was entered into the licensee's corrective action program as Condition Report Disposition Request 3411547 which included corrective actions to evaluate the condition in accordance with station procedures and plan a modification to eliminate the adverse condition associated with containment isolation valve UV002. The finding was more than minor because it affected the design control attribute of the Initiating Events Cornerstone, and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety function during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and mitigating equipment or functions would not be available. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadequate Procedures to Diagnose and Mitigate a Loss of Instrument Air to the Containment A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of operations personnel to adequately establish and implement procedures associated with a loss of instrument air to containment. Specifically, on December 3, 2009, the alarm response and abnormal operating procedures available to the Unit 3 control room operating staff were inadequate to consistently diagnose and mitigate a loss of instrument air to containment. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request (CRDR) 3411457. The performance deficiency associated with this finding involved the failure of operations personnel to adequately establish and implement alarm response and abnormal operating procedures associated with a loss of instrument air to containment. The finding is more than minor because it is associated with the procedure quality attribute of the Initiating Events Cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues. Inspection Report# : 2009005 (pdf)

Significance: Jun 30, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadvertent Decrease of Pressurizer Level Due to Personnel Error A self-revealing non-cited violation of Technical Specification 5.4.1(a), "Procedures," was identified for the failure of operations personnel to follow procedural requirements during a planned plant startup. Specifically, on May 27, 2009, operations personnel did not take actions to lower turbine load after synchronizing the generator to the offsite electrical distribution grid during cooldown, causing a pressurizer low level alarm and a loss of pressurizer heaters. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3336555. The finding is more than minor because it is associated with the human performance attribute of the initiating events cornerstone and affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown and power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in exceeding the technical specification limit for identified reactor coolant system leakage, did not affect other mitigation systems, did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available; and did not increase the likelihood of a fire or internal/external flood. This finding has a crosscutting aspect in the area of human performance associated with decision making because operations personnel failed to properly implement their roles in communicating between applicable operational personnel [H.1(a)]. Inspection Report# : 2009003 (pdf) Mitigating Systems Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: NCV NonCited Violation ADV Drop Test Failure Due to Foreign Material A self-revealing noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, was identified for the failure of maintenance personnel to prevent the introduction of foreign material into the atmospheric dump valve nitrogen system as required by Procedure 30DP-9MP03, System Cleanliness and Foreign Material Exclusion Controls. Specifically, on January 10, 2010, atmospheric dump valve 3-ADV-184 failed the nitrogen accumulator drop test when leakage exceeded an acceptance criterion which was caused by a check valve leaking by due to the presence of foreign material during maintenance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3425640 which included corrective actions to flush the nitrogen lines for all the ADVs and train maintenance personnel on the foreign material exclusion requirements. The finding was more than minor because it affected the equipment reliability attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: NRC Item Type: VIO Violation Failure to Establish Adequate Procedures to Control Potential Tornado Borne Missile Hazards Near the

Essential Spray Ponds The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to establish adequate procedures to ensure evaluation and approval of transient missile hazards that have an effect on the operability of the essential spray ponds. Specifically, since January 15, 1997, civil engineering personnel failed to develop an adequate procedure to verify missile density criteria are not exceeded to ensure operability of the essential spray ponds during severe weather. Due to the licensees failure to restore compliance from the previous NCV 05000528/2008004-04 within a reasonable time, this violation is being cited in a Notice of Violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as CRDR 3397839. The finding is more than minor because it is associated with the external factors attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because appropriate corrective actions were not taken to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Inspection Report# : 2009005 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the Emergency Diesel Generator Train A K-4 Relay in a Timely Manner The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a deficiency associated with the emergency diesel generator voltage regulator K-4 relay in a timely manner. Specifically, on October 16, 2004, maintenance personnel identified that the K-4 relay had a high resistance of approximately 800 ohms but did not replace the relay as required by procedures. This resulted in the failure of the emergency diesel generator to start following maintenance activities on May 7, 2009. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3385257. The finding is more than minor because it is associated with equipment performance attribute of the Mitigating Systems Cornerstone and affects the associated cornerstone objective to ensure the reliability and capability of systems that respond to initiating events. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to require a Phase 2 and Phase 3 analysis by a senior reactor analyst, because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Based on the analysis performed, the analyst concluded that the finding had very low safety significance because with only three failures of the K-4 relay in approximately 170 starts and crediting seven hours for the station batteries during a loss of offsite power event, the resulting core damage frequency is 3.8E-7. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009004 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Corrective Actions for Vaults Containing Station Blackout Cables The team identified a noncited violation of very low safety significance for failure to effectively implement the corrective action requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 8, Corrective Action, which were adopted by the licensee in order to meet 10 CFR 50.63, Loss of All Alternating Current.

Although the licensee started a vault monitoring program for water intrusion in vaults with electrical cables in 2003, the effort to prevent exposure of medium voltage cables to submerged conditions has been ineffective for certain vaults that contain the 15kV station blackout generator output cables. Additionally, there are 27 splices in these cables which have contributed to cable test failures in previous meggar resistance tests that, in some cases, required splice replacement in order to pass resistance tests. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3350712, 3350713, 3350939, and 3352858. This finding is more than minor because it is associated with the design control and equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The finding was reviewed for crosscutting aspects and none were identified. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform an Adequate Operability Evaluation for the Condensate Storage Tank The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform an adequate operability evaluation for the condensate storage tank as required by site procedures. Specifically, upon discovery of the condition, the licensee performed an immediate operability determination evaluation based on concerns with the capability of the loop seal to provide protection from vacuum conditions. Subsequently, the licensee performed additional assessments of their overall program which included the specified operability evaluation in a component design bases review and closure of a confirmatory action letter and failed to identify the inadequacy. During the inspection, the team reviewed the operability determination and identified that the licensee failed to consider or identify concerns with the ability of the condensate storage tank pressure relief valves to operate after a design basis earthquake. The licensee entered this issue into their corrective action program as Palo Verde Action Request 3353683. This finding is more than minor because it is associated with the protection against external events (seismic) attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program since the licensee failed to properly evaluate for operability. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Incorporate Vendor Information for Reactor Trip Breakers The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, with programmatic implications for the licensee's failure to follow site procedures and incorporate updated vendor information for the reactor trip breakers. Specifically, the licensee failed to incorporate an updated revision of the maintenance program manual and at least two technical bulletins from the reactor trip breaker

vendor. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3354252 and 3355082. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience since the licensee failed to implement changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2009008 (pdf) Significance: Aug 12, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Foreign Material Exclusion Requirements The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures and Drawings," for the failure to adequately implement foreign material controls during maintenance. Specifically, on May 21, 2008, maintenance and quality control personnel failed to ensure that no foreign material entered the fuel injection pump 7R during refurbishment. As a result, fuel injection pump 7R seized in place, rendering emergency diesel generator 3A inoperable and unavailable for 31.5 days. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3280474. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require a Phase 2 analysis because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Using the Palo Verde pre-solved sequences and an exposure time of 3 to 30 days with one emergency diesel generator unavailable, the Phase 2 estimation determined this finding was of low to moderate significance. With credit for battery operation for seven hours, the Phase 3 analysis determined that the total delta core damage frequency from all of the combined scenarios was 5 E-7; and thus, the finding was considered to be of very low safety significance (Green). This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely, in a timely manner [H.1(c)] Inspection Report# : 2009010 (pdf) Significance: Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Develop an Adequate Procedure to Ensure Operability of the Essential Cooling Water Heat Exchangers The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations, chemistry, and engineering personnel to develop a procedure with appropriate quantitative or qualitative acceptance criteria for chloride levels to ensure operability of the essential cooling water system heat exchangers. Specifically, from plant startup until April 28, 2009, chemistry personnels Policy CDP1-14, Chemistry Department Policies, stated, in part, that a Palo Verde Action Request will be generated for entry into any Action Level 1, 2, 3 or 5, and did not give actions for Action Level 4. This resulted in chlorides

exceeding Action Level 4 quantitative acceptance criterion in the essential cooling water system Train A without a Palo Verde Action Request being generated, or an operability determination being performed in a timely manner. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3347097. The finding is more than minor because it is associated with the procedure quality attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of human performance associated with decision-making because decisions and the basis for decisions were not communicated to personnel who have a need to know the information in order to perform work safely, in a timely manner [H.1(c)]. Inspection Report# : 2009003 (pdf) Significance: SL-IV Jun 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Written Safety Evaluation in Accordance with 10 CFR 50.59 for Refueling Water Tank Full Flow Recirculation The inspectors identified a non-cited Severity Level IV violation of 10 CFR 50.59 requirements for the failure of engineering personnel to perform adequate written safety evaluations prior to implementing changes to the emergency core cooling system. Specifically, between 1987 and February 2009, engineering personnel failed to obtained prior NRC approval for a change that involved two unreviewed safety questions involving emergency core cooling system operability and containment bypass leakage during an accident. The first example involved a change in an emergency core cooling system lineup that could have prevented the fulfillment of the safety functions of the safety injection system to remove residual heat and mitigate the consequences of an accident. The second example involved opening normally locked close valves, while the plant is operating, that could result in the loss of a safety function to control the release of radioactive material as a result of the containment bypass path. This issue was entered into the licensee's corrective action program as Condition Report / Disposition Request 3287805. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems cornerstone and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events. This finding is also more than minor because it is associated with the configuration control attribute of the Barrier Integrity cornerstone and adversely affects the cornerstone objective of providing reasonable assurance that physical design barriers (fuel cladding, reactor coolant system, and containment) protect the public from radionuclide releases caused by accidents or events. In accordance with Inspection Manual Chapter 0612, Appendix B, "Issue Disposition Screening," the inspectors determined that traditional enforcement applied because this issue may have impacted the NRCs ability to perform its regulatory function, and should be evaluated using the traditional enforcement process. The issue was classified as Severity Level IV because the violation of 10 CFR 50.59 involved conditions evaluated as having very low safety significance by the Significance Determination Process. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding required a Phase 2 analysis because the finding represented a loss of safety system function of the safety injection system. The Phase 2 analysis determined that this finding was potentially greater than Green; therefore, a Phase 3 analysis was completed by a regional senior reactor analyst. The Phase 3 analysis determined that this issue was of very low safety significance based on the senior reactor analyst reviewing the licensee's risk estimate of the condition which concluded that the ICCDP was much less than 1.0E-7. The analyst checked portions of the licensee's analysis using the Palo Verde SPAR model, and found the licensee results to be acceptable. Therefore, the significance of the finding was determined to be very low (Green). This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009003 (pdf)

Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Significance: SL-IV Dec 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Update the UFSAR The inspectors identified a noncited violation of 10 CFR 50.71 Maintenance of Records, because the licensee failed to update their updated final safety analysis report with submittals that include the effects of a change made to the facility. Specifically, the licensee built the old steam generator storage facility on the owner controlled area for long-term radwaste storage of six decommissioned steam generators and three reactor vessel heads and failed to update the updated final safety analysis report to include these changes to the facility and all safety analyses and evaluations performed. This issue was entered in the licensees corrective action program as CRDR 3398042. This issue was dispositioned using traditional enforcement because it had the potential for impacting the NRCs ability to perform its regulatory function. The finding is more than minor because it has a material impact on licensed activities in that the six decommissioned steam generators and the Unit 2 reactor vessel head, with a significant radioactive source term have been relocated from the plant radiological controlled area to the owner controlled area. In addition, the radwaste management program was affected because the licensee determined that this low-level radwaste facility will store these large components until the site is decommissioned. The finding is characterized as a Severity Level IV, noncited violation in accordance with NRC Enforcement Policy, Supplement I, and was treated as a noncited violation consistent with Section VI.A.1 of the NRC Enforcement Policy. This finding was reviewed for crosscutting aspects and none were identified because the performance deficiency is not indicative of current performance. Inspection Report# : 2009005 (pdf) Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : May 26, 2010

Palo Verde 3 2Q/2010 Plant Inspection Findings Initiating Events Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: FIN Finding Failure to Take Corrective Actions for an Identified Adverse Condition A self-revealing finding was identified for the failure of engineering personnel to follow procedures and adequately evaluate an identified adverse condition for corrective actions associated with containment isolation valve UV002 as required by Procedure 90DP-0IP10, Condition Reporting and Procedure 86DP-0EE01, Reliability Centered Maintenance Based System Reviews. Specifically, the licensee identified during a cause analysis performed in 1997 and by a system review conducted in 2004 and 2007 that the failure of containment isolation valve UV002 could result in a reactor trip, but failed to take any corrective actions. This issue was entered into the licensee's corrective action program as Condition Report Disposition Request 3411547 which included corrective actions to evaluate the condition in accordance with station procedures and plan a modification to eliminate the adverse condition associated with containment isolation valve UV002. The finding was more than minor because it affected the design control attribute of the Initiating Events Cornerstone, and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety function during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and mitigating equipment or functions would not be available. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadequate Procedures to Diagnose and Mitigate a Loss of Instrument Air to the Containment A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of operations personnel to adequately establish and implement procedures associated with a loss of instrument air to containment. Specifically, on December 3, 2009, the alarm response and abnormal operating procedures available to the Unit 3 control room operating staff were inadequate to consistently diagnose and mitigate a loss of instrument air to containment. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request (CRDR) 3411457. The performance deficiency associated with this finding involved the failure of operations personnel to adequately establish and implement alarm response and abnormal operating procedures associated with a loss of instrument air to containment. The finding is more than minor because it is associated with the procedure quality attribute of the Initiating Events Cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues. Inspection Report# : 2009005 (pdf)

Mitigating Systems Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: NCV NonCited Violation ADV Drop Test Failure Due to Foreign Material A self-revealing noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, was identified for the failure of maintenance personnel to prevent the introduction of foreign material into the atmospheric dump valve nitrogen system as required by Procedure 30DP-9MP03, System Cleanliness and Foreign Material Exclusion Controls. Specifically, on January 10, 2010, atmospheric dump valve 3-ADV-184 failed the nitrogen accumulator drop test when leakage exceeded an acceptance criterion which was caused by a check valve leaking by due to the presence of foreign material during maintenance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3425640 which included corrective actions to flush the nitrogen lines for all the ADVs and train maintenance personnel on the foreign material exclusion requirements. The finding was more than minor because it affected the equipment reliability attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: NRC Item Type: VIO Violation Failure to Establish Adequate Procedures to Control Potential Tornado Borne Missile Hazards Near the Essential Spray Ponds The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to establish adequate procedures to ensure evaluation and approval of transient missile hazards that have an effect on the operability of the essential spray ponds. Specifically, since January 15, 1997, civil engineering personnel failed to develop an adequate procedure to verify missile density criteria are not exceeded to ensure operability of the essential spray ponds during severe weather. Due to the licensees failure to restore compliance from the previous NCV 05000528/2008004-04 within a reasonable time, this violation is being cited in a Notice of Violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as CRDR 3397839. The finding is more than minor because it is associated with the external factors attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because appropriate corrective actions were not taken to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Inspection Report# : 2009005 (pdf)

Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct a Condition Adverse to Quality with the Emergency Diesel Generator Train A K-4 Relay in a Timely Manner The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a deficiency associated with the emergency diesel generator voltage regulator K-4 relay in a timely manner. Specifically, on October 16, 2004, maintenance personnel identified that the K-4 relay had a high resistance of approximately 800 ohms but did not replace the relay as required by procedures. This resulted in the failure of the emergency diesel generator to start following maintenance activities on May 7, 2009. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3385257. The finding is more than minor because it is associated with equipment performance attribute of the Mitigating Systems Cornerstone and affects the associated cornerstone objective to ensure the reliability and capability of systems that respond to initiating events. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to require a Phase 2 and Phase 3 analysis by a senior reactor analyst, because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Based on the analysis performed, the analyst concluded that the finding had very low safety significance because with only three failures of the K-4 relay in approximately 170 starts and crediting seven hours for the station batteries during a loss of offsite power event, the resulting core damage frequency is 3.8E-7. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2009004 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Ineffective Corrective Actions for Vaults Containing Station Blackout Cables The team identified a noncited violation of very low safety significance for failure to effectively implement the corrective action requirements of Regulatory Guide 1.155, Station Blackout, Appendix A, Criterion 8, Corrective Action, which were adopted by the licensee in order to meet 10 CFR 50.63, Loss of All Alternating Current. Although the licensee started a vault monitoring program for water intrusion in vaults with electrical cables in 2003, the effort to prevent exposure of medium voltage cables to submerged conditions has been ineffective for certain vaults that contain the 15kV station blackout generator output cables. Additionally, there are 27 splices in these cables which have contributed to cable test failures in previous meggar resistance tests that, in some cases, required splice replacement in order to pass resistance tests. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3350712, 3350713, 3350939, and 3352858. This finding is more than minor because it is associated with the design control and equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The finding was reviewed for crosscutting aspects and none were identified. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation

Failure to Perform an Adequate Operability Evaluation for the Condensate Storage Tank The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure to perform an adequate operability evaluation for the condensate storage tank as required by site procedures. Specifically, upon discovery of the condition, the licensee performed an immediate operability determination evaluation based on concerns with the capability of the loop seal to provide protection from vacuum conditions. Subsequently, the licensee performed additional assessments of their overall program which included the specified operability evaluation in a component design bases review and closure of a confirmatory action letter and failed to identify the inadequacy. During the inspection, the team reviewed the operability determination and identified that the licensee failed to consider or identify concerns with the ability of the condensate storage tank pressure relief valves to operate after a design basis earthquake. The licensee entered this issue into their corrective action program as Palo Verde Action Request 3353683. This finding is more than minor because it is associated with the protection against external events (seismic) attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program since the licensee failed to properly evaluate for operability. Inspection Report# : 2009008 (pdf) Significance: Sep 30, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Incorporate Vendor Information for Reactor Trip Breakers The team identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, with programmatic implications for the licensee's failure to follow site procedures and incorporate updated vendor information for the reactor trip breakers. Specifically, the licensee failed to incorporate an updated revision of the maintenance program manual and at least two technical bulletins from the reactor trip breaker vendor. The licensee entered this issue into their corrective action program as Palo Verde Action Requests 3354252 and 3355082. This finding is more than minor because it is associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The risk significance of this finding was determined using Inspection Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings. The finding is of very low safety significance (Green) since the finding did not result in a loss of operability, a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or an actual loss of safety function for greater than 24 hours and the finding did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with operating experience since the licensee failed to implement changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2009008 (pdf) Significance: Aug 12, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Foreign Material Exclusion Requirements The inspectors identified a noncited violation of 10 CFR 50, Appendix B, Criterion V, "Instructions, Procedures and

Drawings," for the failure to adequately implement foreign material controls during maintenance. Specifically, on May 21, 2008, maintenance and quality control personnel failed to ensure that no foreign material entered the fuel injection pump 7R during refurbishment. As a result, fuel injection pump 7R seized in place, rendering emergency diesel generator 3A inoperable and unavailable for 31.5 days. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3280474. The finding is more than minor because it is associated with the equipment performance attribute of the mitigating systems cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to require a Phase 2 analysis because the finding resulted in an actual loss of safety function of a single train for greater than its technical specification allowed outage time. Using the Palo Verde pre-solved sequences and an exposure time of 3 to 30 days with one emergency diesel generator unavailable, the Phase 2 estimation determined this finding was of low to moderate significance. With credit for battery operation for seven hours, the Phase 3 analysis determined that the total delta core damage frequency from all of the combined scenarios was 5 E-7; and thus, the finding was considered to be of very low safety significance (Green). This finding has a crosscutting aspect in the area of human performance associated with decision making because the licensee did not communicate bases for decisions to personnel with a need to know such that work is performed safely, in a timely manner [H.1(c)] Inspection Report# : 2009010 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Significance: SL-IV Dec 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Update the UFSAR The inspectors identified a noncited violation of 10 CFR 50.71 Maintenance of Records, because the licensee failed to update their updated final safety analysis report with submittals that include the effects of a change made to the facility. Specifically, the licensee built the old steam generator storage facility on the owner controlled area for long-term radwaste storage of six decommissioned steam generators and three reactor vessel heads and failed to update the updated final safety analysis report to include these changes to the facility and all safety analyses and evaluations performed. This issue was entered in the licensees corrective action program as CRDR 3398042. This issue was dispositioned using traditional enforcement because it had the potential for impacting the NRCs ability to perform its regulatory function. The finding is more than minor because it has a material impact on licensed activities in that the six decommissioned steam generators and the Unit 2 reactor vessel head, with a significant radioactive source term have been relocated from the plant radiological controlled area to the owner controlled area. In addition, the radwaste management program was affected because the licensee determined that this low-level radwaste facility will store these large components until the site is decommissioned. The finding is characterized as a

Severity Level IV, noncited violation in accordance with NRC Enforcement Policy, Supplement I, and was treated as a noncited violation consistent with Section VI.A.1 of the NRC Enforcement Policy. This finding was reviewed for crosscutting aspects and none were identified because the performance deficiency is not indicative of current performance. Inspection Report# : 2009005 (pdf) Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : September 02, 2010

Palo Verde 3 3Q/2010 Plant Inspection Findings Initiating Events Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: FIN Finding Failure to Take Corrective Actions for an Identified Adverse Condition A self-revealing finding was identified for the failure of engineering personnel to follow procedures and adequately evaluate an identified adverse condition for corrective actions associated with containment isolation valve UV002 as required by Procedure 90DP-0IP10, Condition Reporting and Procedure 86DP-0EE01, Reliability Centered Maintenance Based System Reviews. Specifically, the licensee identified during a cause analysis performed in 1997 and by a system review conducted in 2004 and 2007 that the failure of containment isolation valve UV002 could result in a reactor trip, but failed to take any corrective actions. This issue was entered into the licensee's corrective action program as Condition Report Disposition Request 3411547 which included corrective actions to evaluate the condition in accordance with station procedures and plan a modification to eliminate the adverse condition associated with containment isolation valve UV002. The finding was more than minor because it affected the design control attribute of the Initiating Events Cornerstone, and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety function during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and mitigating equipment or functions would not be available. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadequate Procedures to Diagnose and Mitigate a Loss of Instrument Air to the Containment A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of operations personnel to adequately establish and implement procedures associated with a loss of instrument air to containment. Specifically, on December 3, 2009, the alarm response and abnormal operating procedures available to the Unit 3 control room operating staff were inadequate to consistently diagnose and mitigate a loss of instrument air to containment. This issue was entered into the licensees corrective action program as Condition Report/Disposition Request (CRDR) 3411457. The performance deficiency associated with this finding involved the failure of operations personnel to adequately establish and implement alarm response and abnormal operating procedures associated with a loss of instrument air to containment. The finding is more than minor because it is associated with the procedure quality attribute of the Initiating Events Cornerstone and affects the cornerstone objective of limiting the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions will not be available. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because the licensee failed to implement the corrective action program with a low threshold for identifying issues. Inspection Report# : 2009005 (pdf)

Mitigating Systems Significance: Aug 21, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality for Foreign Material in the Pneumatic Supply Lines to the Atmospheric Dump Valves Actuators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly identify and correct a condition adverse to quality associated with foreign material in the nitrogen and instrument air supply to the atmospheric dump valve. Specifically, between July 2009 and August 2010, corrective actions to address foreign material in the Unit 3 instrument air supply to atmospheric dump valve ADV-185 failed to promptly identify and remove similar debris in remaining instrument air or nitrogen supply lines. The licensee is developing new work orders to flush and inspect pneumatic supply lines to the atmospheric dump valves. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3531638. The performance deficiency was more than minor, and is therefore a finding, because it affected the equipment reliability attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to conduct effectiveness reviews of safety significant decisions to verify the validity of assumptions, identify possible unintended consequences, and determine how to improve future decisions. Inspection Report# : 2010004 (pdf) Significance: May 13, 2010 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Work Instruction to Replace Emergency Diesel Generator Starting Air Turning Gear Interlock Valves A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of maintenance personnel to adequately establish and implement work order instructions associated with the emergency diesel generators starting air turning gear interlock valves. Specifically, on May 13, 2010, Unit 3 emergency diesel generator train B failed to start within its technical specification allowed time due to the turning gear interlock valve 3JDGBUV0234 being improperly positioned during installation. The turning gear interlock valve was replaced and the engine was started and verified to meet all acceptance criteria. Work orders were revised to reflect plunger depression requirements. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3475479. The performance deficiency was more than minor, and is therefore a finding, because it affected the procedure quality attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of problem identification and resolution associated with the operating experience component because the licensee failed to institutionalize operating experience through changes to station processes, procedures, equipment, and training programs.

Inspection Report# : 2010004 (pdf) Significance: Apr 10, 2010 Identified By: NRC Item Type: NCV NonCited Violation Unqualified Coatings in Containment The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for an inadequate procedure for the application of coatings in containment. Specifically, during construction, Specification 13-AM-314, Installation Specification for Surface Coating Systems for Concrete, improperly required a dry-film thickness of 2 to 5 mils for Mobil/Valspar 84-V-200, which is beyond the limits of 2 to 5 mils wet-film thickness that was allowed by the vendor instructions. Mobil/Valspar 84-V-200 was found to lack design basis testing and subsequent testing demonstrated that 50 percent of the coating in excess of 2 mils thickness failed as particulate, rather than chips, which increases debris loading on the containment sump. The licensee plans to revise calculation N001-1106-00002, Debris Generation Due to LOCA within Containment for Resolution of GSI-191, to incorporate the added debris loading from the unqualified coatings as a corrective action. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3469133. The performance deficiency was more than minor, and is therefore a finding, because it affected the design control attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not reflective of current performance. Inspection Report# : 2010004 (pdf) Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: NCV NonCited Violation ADV Drop Test Failure Due to Foreign Material A self-revealing noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, was identified for the failure of maintenance personnel to prevent the introduction of foreign material into the atmospheric dump valve nitrogen system as required by Procedure 30DP-9MP03, System Cleanliness and Foreign Material Exclusion Controls. Specifically, on January 10, 2010, atmospheric dump valve 3-ADV-184 failed the nitrogen accumulator drop test when leakage exceeded an acceptance criterion which was caused by a check valve leaking by due to the presence of foreign material during maintenance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3425640 which included corrective actions to flush the nitrogen lines for all the ADVs and train maintenance personnel on the foreign material exclusion requirements. The finding was more than minor because it affected the equipment reliability attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Significance: Dec 31, 2009 Identified By: NRC Item Type: VIO Violation

Failure to Establish Adequate Procedures to Control Potential Tornado Borne Missile Hazards Near the Essential Spray Ponds The inspectors identified a cited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," for the failure of engineering personnel to establish adequate procedures to ensure evaluation and approval of transient missile hazards that have an effect on the operability of the essential spray ponds. Specifically, since January 15, 1997, civil engineering personnel failed to develop an adequate procedure to verify missile density criteria are not exceeded to ensure operability of the essential spray ponds during severe weather. Due to the licensees failure to restore compliance from the previous NCV 05000528/2008004-04 within a reasonable time, this violation is being cited in a Notice of Violation consistent with Section VI.A of the NRC Enforcement Policy. This issue was entered into the licensee's corrective action program as CRDR 3397839. The finding is more than minor because it is associated with the external factors attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the reliability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program because appropriate corrective actions were not taken to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Inspection Report# : 2009005 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Significance: SL-IV Dec 31, 2009 Identified By: NRC Item Type: NCV NonCited Violation Failure to Periodically Update the UFSAR The inspectors identified a noncited violation of 10 CFR 50.71 Maintenance of Records, because the licensee failed to update their updated final safety analysis report with submittals that include the effects of a change made to the facility. Specifically, the licensee built the old steam generator storage facility on the owner controlled area for long-term radwaste storage of six decommissioned steam generators and three reactor vessel heads and failed to update the updated final safety analysis report to include these changes to the facility and all safety analyses and evaluations performed. This issue was entered in the licensees corrective action program as CRDR 3398042. This issue was dispositioned using traditional enforcement because it had the potential for impacting the NRCs ability to perform its regulatory function. The finding is more than minor because it has a material impact on licensed activities in that the six decommissioned steam generators and the Unit 2 reactor vessel head, with a significant radioactive source term have been relocated from the plant radiological controlled area to the owner controlled area.

In addition, the radwaste management program was affected because the licensee determined that this low-level radwaste facility will store these large components until the site is decommissioned. The finding is characterized as a Severity Level IV, noncited violation in accordance with NRC Enforcement Policy, Supplement I, and was treated as a noncited violation consistent with Section VI.A.1 of the NRC Enforcement Policy. This finding was reviewed for crosscutting aspects and none were identified because the performance deficiency is not indicative of current performance. Inspection Report# : 2009005 (pdf) Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : November 29, 2010

Palo Verde 3 4Q/2010 Plant Inspection Findings Initiating Events Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: FIN Finding Failure to Take Corrective Actions for an Identified Adverse Condition A self-revealing finding was identified for the failure of engineering personnel to follow procedures and adequately evaluate an identified adverse condition for corrective actions associated with containment isolation valve UV002 as required by Procedure 90DP-0IP10, Condition Reporting and Procedure 86DP-0EE01, Reliability Centered Maintenance Based System Reviews. Specifically, the licensee identified during a cause analysis performed in 1997 and by a system review conducted in 2004 and 2007 that the failure of containment isolation valve UV002 could result in a reactor trip, but failed to take any corrective actions. This issue was entered into the licensee's corrective action program as Condition Report Disposition Request 3411547 which included corrective actions to evaluate the condition in accordance with station procedures and plan a modification to eliminate the adverse condition associated with containment isolation valve UV002. The finding was more than minor because it affected the design control attribute of the Initiating Events Cornerstone, and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety function during shutdown as well as power operations. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have very low safety significance because the finding did not contribute to both the likelihood of a reactor trip and mitigating equipment or functions would not be available. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Mitigating Systems Significance: Aug 21, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality for Foreign Material in the Pneumatic Supply Lines to the Atmospheric Dump Valves Actuators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly identify and correct a condition adverse to quality associated with foreign material in the nitrogen and instrument air supply to the atmospheric dump valve. Specifically, between July 2009 and August 2010, corrective actions to address foreign material in the Unit 3 instrument air supply to atmospheric dump valve ADV-185 failed to promptly identify and remove similar debris in remaining instrument air or nitrogen supply lines. The licensee is developing new work orders to flush and inspect pneumatic supply lines to the atmospheric dump valves. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3531638. The performance deficiency was more than minor, and is therefore a finding, because it affected the equipment reliability attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the

finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to conduct effectiveness reviews of safety significant decisions to verify the validity of assumptions, identify possible unintended consequences, and determine how to improve future decisions. Inspection Report# : 2010004 (pdf) Significance: May 13, 2010 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Work Instruction to Replace Emergency Diesel Generator Starting Air Turning Gear Interlock Valves A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of maintenance personnel to adequately establish and implement work order instructions associated with the emergency diesel generators starting air turning gear interlock valves. Specifically, on May 13, 2010, Unit 3 emergency diesel generator train B failed to start within its technical specification allowed time due to the turning gear interlock valve 3JDGBUV0234 being improperly positioned during installation. The turning gear interlock valve was replaced and the engine was started and verified to meet all acceptance criteria. Work orders were revised to reflect plunger depression requirements. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3475479. The performance deficiency was more than minor, and is therefore a finding, because it affected the procedure quality attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of problem identification and resolution associated with the operating experience component because the licensee failed to institutionalize operating experience through changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2010004 (pdf) Significance: Apr 10, 2010 Identified By: NRC Item Type: NCV NonCited Violation Unqualified Coatings in Containment The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for an inadequate procedure for the application of coatings in containment. Specifically, during construction, Specification 13-AM-314, Installation Specification for Surface Coating Systems for Concrete, improperly required a dry-film thickness of 2 to 5 mils for Mobil/Valspar 84-V-200, which is beyond the limits of 2 to 5 mils wet-film thickness that was allowed by the vendor instructions. Mobil/Valspar 84-V-200 was found to lack design basis testing and subsequent testing demonstrated that 50 percent of the coating in excess of 2 mils thickness failed as particulate, rather than chips, which increases debris loading on the containment sump. The licensee plans to revise calculation N001-1106-00002, Debris Generation Due to LOCA within Containment for Resolution of GSI-191, to incorporate the added debris loading from the unqualified coatings as a corrective action. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3469133. The performance deficiency was more than minor, and is therefore a finding, because it affected the design control attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety

function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not reflective of current performance. Inspection Report# : 2010004 (pdf) Significance: Mar 31, 2010 Identified By: Self-Revealing Item Type: NCV NonCited Violation ADV Drop Test Failure Due to Foreign Material A self-revealing noncited violation of 10 CFR 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, was identified for the failure of maintenance personnel to prevent the introduction of foreign material into the atmospheric dump valve nitrogen system as required by Procedure 30DP-9MP03, System Cleanliness and Foreign Material Exclusion Controls. Specifically, on January 10, 2010, atmospheric dump valve 3-ADV-184 failed the nitrogen accumulator drop test when leakage exceeded an acceptance criterion which was caused by a check valve leaking by due to the presence of foreign material during maintenance. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3425640 which included corrective actions to flush the nitrogen lines for all the ADVs and train maintenance personnel on the foreign material exclusion requirements. The finding was more than minor because it affected the equipment reliability attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not indicative of current performance. Inspection Report# : 2010002 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed.

Miscellaneous Significance: N/A Dec 17, 2010 Identified By: NRC Item Type: FIN Finding Palo Verde Nuclear Generating Station Biennial PI&R Inspection Summary The team concluded that the corrective action program at Palo Verde Nuclear Generating Station was generally effective. The team concluded that site personnel identify problems at a low threshold and enter them into the corrective action program. The licensee utilizes a rigorous screening process to characterize issues and that the vast majority of issues are appropriately evaluated and adequate corrective actions are taken. The team did identify isolated cases where problem evaluation could have been more effective at addressing the underlying causes of issues as well as a number of examples where corrective actions were not timely or adequate to address identified problems. The team also determined that though the overall process for identifying and correcting issues was well established, certain incidents of procedural violations associated with corrective action program processes led to delays and less than adequate actions to correct material deficiencies. Though the team identified areas in which the licensee could improve their corrective action program, the overall process was determined to be effective in identifying and correcting conditions adverse to quality. The licensee appropriately evaluated industry operating experience for relevance to the facility, entered applicable items in the corrective action program, and subsequently utilized OE in root cause and apparent cause evaluations. The team did determine that that the licensee could improve its utilization of OE to prevent the occurrence of similar events at Palo Verde. The team determined that the licensee performed very effective quality assurance audits and self assessments. The team performed 7 safety culture focus group discussions involving approximately 70 licensee personnel in order assess the safety conscious work environment of the site. The team felt that most of the work groups interviewed had a strong safety conscious work environment; however, 3 of the 7 work groups interviewed exhibited weaknesses in safety culture. Specifically, the team found that although there were many individuals who felt comfortable raising safety concerns without fear of retaliation, there were some individuals in the operations department who expressed the perception that they would or might be retaliated against for raising certain safety concerns. Inspection Report# : 2010008 (pdf) Last modified : March 03, 2011

Palo Verde 3 1Q/2011 Plant Inspection Findings Initiating Events Significance: Mar 31, 2011 Identified By: NRC Item Type: FIN Finding Downpower Due to High Condenser Hotwell Sodium Levels DRAFT: The inspectors identified a self-revealing finding after Palo Verde Nuclear Generating Station failed to provide adequate work instructions and procedures for main condenser tube sheet coatings in Unit 3. As a result, a degraded tube was not replugged following coating and failed on January 15, 2011, resulting in high sodium levels in the condensate system. Operators entered the abnormal operating procedures for condenser tube rupture and reduced power to 40 percent power to facilitate troubleshooting and repairs. The licensee concluded that Work Order 3384533 and Procedure 31MT-9ZZ19, Tube Plugging of Secondary Heat Transfer Components, did not provide adequate instructions for the removal, accountability, and reinstallation of permanent plugs during maintenance. The licensee completed repairs to the main condenser and returned Unit 3 to full power. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3580739 and implemented immediate corrective actions to revise the pre-job brief checklist and maintenance work instructions for condenser tube plugging. The licensee has not completed all corrective actions for this issue. The inspectors determined that the performance deficiency is more than minor because it affected the equipment reliability attribute of the Initiating Events Cornerstone and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Attachment 4 of Inspection Manual Chapter 0609, Maintenance Risk Assessment and Risk Management Significance Determination Process, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a crosscutting aspect in the area human performance associated with the work practices component because the licensee failed to adequately communicate and implement human error prevention techniques, such as self and peer checking that could have ensured the degraded tube was replugged prior to plant operatio. Inspection Report# : 2011002 (pdf) Mitigating Systems Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Corrective Action Program Procedure DRAFT: The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criteria V, Instructions, Procedures, and Drawings, after the licensee failed to promptly evaluate a nonconforming condition for operability as required by Procedure 01PR-0AP04, Corrective Action Program. On November 23, 2010, the licensee completed an apparent cause evaluation for a failure of the Unit 3 B spent fuel pool cooling pump and concluded the cause of the failure was a misalignment by the vendor of the bell alarm bracket within the K-600S 480 VAC Class 1E circuit breaker. On December 7, 2010, the extent of condition review identified 76 breakers installed in the three units that could be susceptible to the same failure mechanism. On January 28, 2011, control room operators completed an immediate operability determination for the nonconforming condition and concluded the affected systems, structures, and

components remained capable of performing their safety functions. The inspectors concluded that the licensee failed to follow Procedure 01PR-0AP04, Corrective Action Program, Step 3.2.1.5, which states Operability shall be determined immediately upon discovery that an SSC subject to technical specification or that supports SSCs subject to technical specification is in a degraded or nonconforming condition. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3587124 and has not completed corrective actions for this issue. The inspectors concluded that the failure of the licensee personnel to promptly evaluate nonconforming conditions for the effect on operability, in accordance with Procedure 01PR-0AP04, was a performance deficiency. The finding is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors used Inspection Manual Chapter 609, , Phase 1 - Initial Screening and Characterization of Findings, to analyze the finding and concluded it was of very low safety significance (Green) because it did not represent a loss of system safety function, represent actual loss of safety function of a single train for greater than its technical specification allowed outage time, represent an actual loss of safety function of one or more non-technical specification trains of equipment designated as risk-significant per 10 CFR 50.65 for greater than 24 hours, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors concluded that this finding had a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to adequately evaluate the condition adverse to quality and identify that affected plant equipment needed to be evaluated for operability. Inspection Report# : 2011002 (pdf) Significance: SL-IV Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform a 10 CFR Part 21 Evaluation DRAFT: The inspectors identified a Severity Level IV noncited violation of 10 CFR Part 21 after Palo Verde Nuclear Generating Station failed to evaluate an identified deviation within 60 days of discovery to determine if there is a substantial safety hazard. On November 23, 2010, the licensee completed an apparent cause evaluation for a failure of the Unit 3 B spent fuel pool cooling pump and concluded the cause of the failure was a misalignment by the vendor of the bell alarm bracket within the K-600S 480 VAC Class 1E circuit breaker. Additionally, the apparent cause evaluation identified similar failures of the same type of breaker dating back to April 29, 2009. The inspectors questioned whether the licensee should have performed an evaluation in accordance with 10 CFR Part 21 to determine if a defect existed. On February 15, 2011, the licensee completed an evaluation of prior deviations related to the alignment of bell alarm switches and concluded the deviations were defects that were reportable per 10 CFR Part 21. The licensee subsequently submitted Part 21 report 2011-07-00 on February 24, 2011. Additionally, the licensee completed an operability determination for the potentially affected breakers currently installed in the units and concluded that the equipment continued to be able to perform their respective safety functions. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3593672 and has not completed corrective actions for this issue. The inspectors evaluated this violation using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section IV.A.3 and Supplement I, Paragraph D.4, of the NRC Enforcement Policy, the inspectors concluded the violation was a Severity Level IV because the licensee failed to make a timely written report. The inspectors also concluded that the violation was a finding under the Reactor Oversight Process because the failure of licensee personnel to follow station procedures was a performance deficiency. The inspectors concluded that the finding is more than minor because the failure to follow procedures could reasonably be seen to lead to a more significant safety concern. The inspectors concluded that the finding had very low safety significance because the failure to follow procedures did not result in an actual loss of a system safety function or equipment required by technical specifications, or involve the loss or degradation of equipment specifically designed to mitigate a seismic, flooding, or severe weather initiating event, and did not involve the total loss of any safety function that contributes to an external event initiated core damage accident sequence. The inspectors concluded that this finding had a crosscutting aspect in the area of human performance associated with the resources component because licensee processes and procedures did not provide adequate instructions on identifying and evaluating defects for reportability.

Inspection Report# : 2011002 (pdf) Significance: Nov 15, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Correct a Condition Adverse to Quality for the Essential Cooling Water Room Cooler The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly correct a condition adverse to quality associated with room cooler AHU-3MHAAZ05 blower shaft dimensions. Specifically, between July 2008 and November 2010, corrective actions for high vibrations in the Unit 3 essential cooling water system train A room cooler blower failed to promptly address the incorrect shaft dimensions at the bearing shaft interface. The licensee is developing corrective actions to replace the defective shaft by procuring a new shaft or machining a shaft on site. The licensee entered this issue into the corrective action program as Palo Verde Action Request 3559219. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined the finding had a very low safety significance (Green) because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding had a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure that personnel, equipment, and procedure were available and adequate to assure nuclear safety by minimizing long standing equipment issues. Inspection Report# : 2010005 (pdf) Significance: Sep 30, 2010 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Work Instruction to Replace Emergency Diesel Generator Starting Air Turning Gear Interlock Valves A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of maintenance personnel to adequately establish and implement work order instructions associated with the emergency diesel generators starting air turning gear interlock valves. Specifically, on May 13, 2010, Unit 3 emergency diesel generator train B failed to start within its technical specification allowed time due to the turning gear interlock valve 3JDGBUV0234 being improperly positioned during installation. The turning gear interlock valve was replaced and the engine was started and verified to meet all acceptance criteria. Work orders were revised to reflect plunger depression requirements. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3475479. The performance deficiency was more than minor, and is therefore a finding, because it affected the procedure quality attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of problem identification and resolution associated with the operating experience component because the licensee failed to institutionalize operating experience through changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2010004 (pdf) Significance: Sep 30, 2010 Identified By: NRC

Item Type: NCV NonCited Violation Unqualified Coatings in Containment The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for an inadequate procedure for the application of coatings in containment. Specifically, during construction, Specification 13-AM-314, Installation Specification for Surface Coating Systems for Concrete, improperly required a dry-film thickness of 2 to 5 mils for Mobil/Valspar 84-V-200, which is beyond the limits of 2 to 5 mils wet-film thickness that was allowed by the vendor instructions. Mobil/Valspar 84-V-200 was found to lack design basis testing and subsequent testing demonstrated that 50 percent of the coating in excess of 2 mils thickness failed as particulate, rather than chips, which increases debris loading on the containment sump. The licensee plans to revise calculation N001-1106-00002, Debris Generation Due to LOCA within Containment for Resolution of GSI-191, to incorporate the added debris loading from the unqualified coatings as a corrective action. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3469133. The performance deficiency was more than minor, and is therefore a finding, because it affected the design control attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not reflective of current performance. Inspection Report# : 2010004 (pdf) Significance: Sep 10, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Operator Licensing Examination Integrity The inspectors identified a noncited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure that the integrity of an operating test administered to licensed operators was maintained. During the week of December 8, 2009, twenty-four licensed operators received three job performance measures and one additional licensed operator received five job performance measures for their operating tests that had been previously administered to other licensed operators in previous weeks. This failure resulted in a compromise of examination integrity because it exceeded the 50 percent overlap required by quality procedure LOCT-TPD-R56, Licensed Operator Continuing Training Program, Revision 56, for this portion of the examination, but did not lead to an actual effect on the equitable and consistent administration of the examination. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3527071. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely impacted the human performance attribute of the mitigating systems cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial examinations could be a precursor to a more significant event. Using Manual Chapter 0609, Significance Determination Process, Phase 1 worksheets, and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green) because, although the finding resulted in a compromise of the integrity of operating test job performance measures and compensatory actions were not immediately taken when the compromise should have been discovered in 2009, the equitable and consistent administration of the test was not actually impacted by this compromise. This finding has a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure that procedures were accurately translated from industry standards such that the 50 percent maximum overlap was not exceeded. Inspection Report# : 2010005 (pdf) Significance: Sep 09, 2010

Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures for Medical Examinations of Licensed Operators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of the licensee to follow their quality procedure 01DP-0EM13, Licensed Operator Medical Examinations, Revision, which provides the medical examination requirements for licensed operators at Palo Verde Nuclear Generating Station. Of the 15 medical records reviewed by the inspectors, 7 licensed senior reactor operator medical records did not contain the proper no-solo restrictions imposed by the NRC when these individuals were licensed. Additionally, the software that the licensee used to track these restrictions (Station Work Management System or SWMS) did not reflect the proper restrictions for these 7 individuals. This issue was entered into the licensees corrective action program as Condition Report Disposition Requests 3527072 and 3526979. The failure of the licensees medical staff to follow their procedure for implementing the required medical examination program was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely impacted the human performance attribute of the mitigating systems cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609, Significance Determination Process, Phase 1 worksheets, and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance and is being characterized as a Green, noncited violation. The finding was determined to be Green, using Appendix I of Manual Chapter 0609, because more than 20 percent of the medical records reviewed contained significant deficiencies. The finding was also determined to have very low safety significance (Green) because: (1) the finding did not result in any events in the control room; and (2) no health requirements required by ANS/ANSI 3.4-1983 Medical Certification and Monitoring of Personnel Requiring Operator Licenses for Nuclear Power Plants were exceeded by any licensed operator while on watch. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because this procedure and its associated software are the two principle mechanisms that the facility uses to ensure that licensed operators are fit for duty. Inspection Report# : 2010005 (pdf) Significance: Aug 21, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality for Foreign Material in the Pneumatic Supply Lines to the Atmospheric Dump Valves Actuators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly identify and correct a condition adverse to quality associated with foreign material in the nitrogen and instrument air supply to the atmospheric dump valve. Specifically, between July 2009 and August 2010, corrective actions to address foreign material in the Unit 3 instrument air supply to atmospheric dump valve ADV-185 failed to promptly identify and remove similar debris in remaining instrument air or nitrogen supply lines. The licensee is developing new work orders to flush and inspect pneumatic supply lines to the atmospheric dump valves. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3531638. The performance deficiency was more than minor, and is therefore a finding, because it affected the equipment reliability attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to conduct effectiveness reviews of safety significant decisions to verify the validity of assumptions, identify possible unintended consequences, and determine how to improve future decisions. Inspection Report# : 2010004 (pdf)

Significance: SL-IV Sep 09, 2000 Identified By: NRC Item Type: NCV NonCited Violation Failure to Ensure All License Conditions Are Met for Licensed Operators The inspectors identified a Severity Level IV violation of 10 CFR 55.3, License Requirements, for the failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators was not met for three licensed operators. Two of these licensed operators performed licensed operator duties 42 times between February 8 and March 25, 2010, after the deadline for their biennial examinations had passed. Upon discovery, the licensee removed these individuals from watchstanding duties pending follow-up medical evaluations. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3526981. The failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3 is a performance deficiency. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators (as required in 10 CFR 55.21) was not met for three licensed operators, two of which were standing watch with expired medical examinations. The finding was evaluated using the traditional enforcement process because the failure to determine an operators medical condition and general health has the potential to impact the NRCs ability to perform its regulatory function; the NRC was not notified nor allowed an opportunity to review the specific medical conditions of the two operators whose medical qualifications had expired while they were standing watch or eligible to stand watch. Using the NRCs Enforcement Policy, section 6.4.d, Severity Level IV violation examples, this finding is similar to example 1 which states, in part that an unqualified individual performing the functions of an operator or senior operator. Two licensed operators stood watch without a certified medical examination within the two year period that the medical examination is required to be completed and certified by the physician. Because: (1) the medical conditions of the two licensed operators did not change when they received their medical examinations in recent weeks; (2) the finding did not cause any plant events or transients while the individuals were on watch; (3) it was not repetitive or willful; and (4) it was entered into the corrective action program, the finding was determined to be of very low safety significance and is being treated as a Severity Level IV noncited violation consistent with the NRC Enforcement Policy. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because medical staff supervisors did not oversee the biennial physical examination due dates such that nuclear safety was supported. Inspection Report# : 2010005 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Physical Protection

Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Dec 17, 2010 Identified By: NRC Item Type: FIN Finding Palo Verde Nuclear Generating Station Biennial PI&R Inspection Summary The team concluded that the corrective action program at Palo Verde Nuclear Generating Station was generally effective. The team concluded that site personnel identify problems at a low threshold and enter them into the corrective action program. The licensee utilizes a rigorous screening process to characterize issues and that the vast majority of issues are appropriately evaluated and adequate corrective actions are taken. The team did identify isolated cases where problem evaluation could have been more effective at addressing the underlying causes of issues as well as a number of examples where corrective actions were not timely or adequate to address identified problems. The team also determined that though the overall process for identifying and correcting issues was well established, certain incidents of procedural violations associated with corrective action program processes led to delays and less than adequate actions to correct material deficiencies. Though the team identified areas in which the licensee could improve their corrective action program, the overall process was determined to be effective in identifying and correcting conditions adverse to quality. The licensee appropriately evaluated industry operating experience for relevance to the facility, entered applicable items in the corrective action program, and subsequently utilized OE in root cause and apparent cause evaluations. The team did determine that that the licensee could improve its utilization of OE to prevent the occurrence of similar events at Palo Verde. The team determined that the licensee performed very effective quality assurance audits and self assessments. The team performed 7 safety culture focus group discussions involving approximately 70 licensee personnel in order assess the safety conscious work environment of the site. The team felt that most of the work groups interviewed had a strong safety conscious work environment; however, 3 of the 7 work groups interviewed exhibited weaknesses in safety culture. Specifically, the team found that although there were many individuals who felt comfortable raising safety concerns without fear of retaliation, there were some individuals in the operations department who expressed the perception that they would or might be retaliated against for raising certain safety concerns. Inspection Report# : 2010008 (pdf) Last modified : June 07, 2011

Palo Verde 3 2Q/2011 Plant Inspection Findings Initiating Events Significance: Jun 30, 2011 Identified By: Self-Revealing Item Type: FIN Finding Failure of 13.8kV Splice due to Inadequate Maintenance Inspectors reviewed a Green self-revealing finding for failure to properly repair a 13.8kV cable associated with the AENANX02 startup transformer. Specifically, the work performed failed to achieve an acceptable level of quality as required by Procedure 30DP-9MP01 Conduct of Maintenance, and as a result the splice failed causing valid actuations of the emergency diesel generators due to a partial loss of offsite power to both Unit 1 and Unit 3. The licensee plans to revise Specification 13-EN-306, Installation Specification for Cable Splicing and Terminations for PVNGS, to remove the use of taped splices for 13.8kV cable. The licensee entered this issue into the corrective action program as Condition Report / Disposition Requests 3616634. The failure of the licensee to perform work with an acceptable level of quality for 13.8kV cable splicing was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment reliability attribute of the Initiating Events Cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a cross-cutting aspect in the area of human performance associated with the resources component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for splicing of 13.8kV electrical cable. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: Self-Revealing Item Type: FIN Finding Inadequate Work Instructions for Condenser Coating The inspectors identified a self-revealing finding after Palo Verde Nuclear Generating Station failed to adequately perform maintenance activities associated with main condenser tube sheet coatings in Unit 3. As a result, a degraded tube was not replugged following coating and failed on January 15, 2011, resulting in high sodium levels in the condensate system. Operators entered the abnormal operating procedures for condenser tube rupture and reduced power to 40 percent power to facilitate troubleshooting and repairs. The licensee concluded that Work Order 3384533 and Procedure 31MT-9ZZ19, Tube Plugging of Secondary Heat Transfer Components, did not provide adequate instructions for the removal, accountability, and reinstallation of permanent plugs during maintenance. The licensee also concluded that engineering verification inspection practices were inadequate and no procedural guidance existed for the verification. The licensee completed repairs to the main condenser and returned Unit 3 to full power. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3580739 and implemented immediate corrective actions to revise the pre-job brief checklist and maintenance work instructions for condenser tube plugging. The licensee has not completed all corrective actions for this issue. The inspectors determined that the performance deficiency is more than minor because it affected the equipment reliability attribute of the Initiating Events Cornerstone and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a crosscutting aspect in the area of human performance associated with the resources

component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for tube sheet coating, replugging and verification. Inspection Report# : 2011002 (pdf) Mitigating Systems Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Complete an Immediate Operability Determination for Code System Leakage Test The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Contrary to the above, from March 11 through April 19, 2011, the licensee failed to complete an immediate operability determination in accordance with Procedure 01PR-0AP04, Corrective Action Program, when the licensee discovered the system leakage test methodology for the diesel fuel oil transfer system did not conform to ASME Code, Section XI testing requirements. This condition was placed in the corrective action program as Palo Verde Action Requests 3704003. The inspectors determined that the failure to complete an immediate operability determination in accordance with paragraph 3.2.1.5 of Procedure 01PR-0AP04 was a performance deficiency. The performance deficiency is more than minor because the nonconforming condition created a reasonable doubt on the operability of the diesel fuel oil transfer system. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding is a design or qualification deficiency confirmed not to result in the loss of operability or functionality of the system. The finding has a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to identify issues completely, accurately, and in a timely manner commensurate with their safety significance. Specifically, the licensee failed to accurately document the nonconforming condition identified in Palo Verde Action Requests 3654452 which led to a failure to complete an immediate operability determination as required. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Corrective Action Program Procedure The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criteria V, Instructions, Procedures, and Drawings, after the licensee failed to promptly evaluate a nonconforming condition for operability as required by Procedure 01PR-0AP04, Corrective Action Program. Procedure 01PR-0AP04, Corrective Action Program, step 3.2.1.5, stated Operability shall be determined immediately upon discovery that an SSC subject to technical specification or that supports SSCs subject to technical specification is in a degraded or nonconforming condition. Operators failed to perform an operability determination immediately following the licensees discovery of a potentially degraded and nonconforming condition associated with a manufacturing defect in K-600S 480 VAC Class 1E circuit breakers. On December 7, 2010, an extent of condition review identified 76 breakers installed in the three units that could be susceptible to the same failure mechanism. However, operators did not perform an immediate operability determination until January 28, 2011. Operators subsequently concluded the affected breakers remained capable of performing their safety functions. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3587124 and has not completed corrective actions for this issue. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined

the finding had a very low safety significance (Green) because it did not represent a loss of system safety function, represent actual loss of safety function of a single train for greater than its technical specification allowed outage time, represent an actual loss of safety function of one or more non-technical specification trains of equipment designated as risk-significant per 10 CFR 50.65 for greater than 24 hours, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors concluded that this finding had a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to implement a corrective action program with a low threshold for identifying issues. In this case, the licensee failed to initiate a Palo Verde Action Request that would have required a review for operability when the extent of condition review identified that safety-related components were affected. Inspection Report# : 2011002 (pdf) Significance: SL-IV Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform a 10 CFR Part 21 Evaluation The inspectors identified a Severity Level IV noncited violation of 10 CFR Part 21 after Palo Verde Nuclear Generating Station failed to evaluate an identified deviation within 60 days of discovery to determine if there was a substantial safety hazard. On November 23, 2010, the licensee completed an apparent cause evaluation for a failure of the Unit 3 train B spent fuel pool cooling pump and concluded the cause of the failure was a misalignment by the vendor of the bell alarm bracket within the K-600S 480 VAC Class 1E circuit breaker. Additionally, the apparent cause evaluation identified similar failures of the same type of breaker dating back to April 29, 2009. On December 7, 2010, the extent of condition review identified seventy six breakers, including some in safety related applications, installed in the three units that could be impacted by the same failure mechanism. The inspectors questioned whether the licensee should have performed an evaluation in accordance with 10 CFR Part 21 to determine if a defect existed. On February 15, 2011, the licensee completed an evaluation of prior deviations related to the alignment of bell alarm switches and concluded the deviations were defects that were reportable per 10 CFR Part 21. The licensee subsequently submitted Part 21 Report 2011-07-00 on February 24, 2011. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3593672 and has not completed corrective actions for this issue. The inspectors concluded that the failure to perform the substantial safety hazard evaluation within 60 days as required by 10 CFR 21.21(a)(1) was a violation of NRC requirements. The inspectors evaluated this violation using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the violation was a Severity Level IV because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011002 (pdf) Significance: SL-IV Feb 08, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Ensure All License Conditions Are Met for Licensed Operators The inspectors identified a Severity Level IV violation of 10 CFR 55.3, License Requirements, for the failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators was not met for three licensed operators. Two of these licensed operators performed licensed operator duties 42 times between February 8 and March 25, 2010, after the deadline for their biennial examinations had passed. Upon discovery, the licensee removed these individuals from watchstanding duties pending follow-up medical evaluations. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3526981. The failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3 is a performance deficiency. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators (as required in 10 CFR 55.21) was not met for three licensed operators, two of

which were standing watch with expired medical examinations. The finding was evaluated using the traditional enforcement process because the failure to determine an operators medical condition and general health has the potential to impact the NRCs ability to perform its regulatory function; the NRC was not notified nor allowed an opportunity to review the specific medical conditions of the two operators whose medical qualifications had expired while they were standing watch or eligible to stand watch. Using the NRCs Enforcement Policy, section 6.4.d, Severity Level IV violation examples, this finding is similar to example 1 which states, in part that an unqualified individual performing the functions of an operator or senior operator. Two licensed operators stood watch without a certified medical examination within the two year period that the medical examination is required to be completed and certified by the physician. Because: (1) the medical conditions of the two licensed operators did not change when they received their medical examinations in recent weeks; (2) the finding did not cause any plant events or transients while the individuals were on watch; (3) it was not repetitive or willful; and (4) it was entered into the corrective action program, the finding was determined to be of very low safety significance and is being treated as a Severity Level IV noncited violation consistent with the NRC Enforcement Policy. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because medical staff supervisors did not oversee the biennial physical examination due dates such that nuclear safety was supported. Inspection Report# : 2010005 (pdf) Significance: Nov 15, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Correct a Condition Adverse to Quality for the Essential Cooling Water Room Cooler The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly correct a condition adverse to quality associated with room cooler AHU-3MHAAZ05 blower shaft dimensions. Specifically, between July 2008 and November 2010, corrective actions for high vibrations in the Unit 3 essential cooling water system train A room cooler blower failed to promptly address the incorrect shaft dimensions at the bearing shaft interface. The licensee is developing corrective actions to replace the defective shaft by procuring a new shaft or machining a shaft on site. The licensee entered this issue into the corrective action program as Palo Verde Action Request 3559219. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined the finding had a very low safety significance (Green) because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding had a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure that personnel, equipment, and procedure were available and adequate to assure nuclear safety by minimizing long standing equipment issues. Inspection Report# : 2010005 (pdf) Significance: Sep 30, 2010 Identified By: Self-Revealing Item Type: NCV NonCited Violation Inadequate Work Instruction to Replace Emergency Diesel Generator Starting Air Turning Gear Interlock Valves A self-revealing noncited violation of 10 CFR Part 50, Appendix B, Criterion V, "Instructions, Procedures, and Drawings," was identified for the failure of maintenance personnel to adequately establish and implement work order instructions associated with the emergency diesel generators starting air turning gear interlock valves. Specifically, on May 13, 2010, Unit 3 emergency diesel generator train B failed to start within its technical specification allowed time due to the turning gear interlock valve 3JDGBUV0234 being improperly positioned during installation. The turning gear interlock valve was replaced and the engine was started and verified to meet all acceptance criteria. Work orders were revised to reflect plunger depression requirements. This issue was entered into the licensees corrective action program as Palo Verde Action Request 3475479.

The performance deficiency was more than minor, and is therefore a finding, because it affected the procedure quality attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of problem identification and resolution associated with the operating experience component because the licensee failed to institutionalize operating experience through changes to station processes, procedures, equipment, and training programs. Inspection Report# : 2010004 (pdf) Significance: Sep 30, 2010 Identified By: NRC Item Type: NCV NonCited Violation Unqualified Coatings in Containment The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for an inadequate procedure for the application of coatings in containment. Specifically, during construction, Specification 13-AM-314, Installation Specification for Surface Coating Systems for Concrete, improperly required a dry-film thickness of 2 to 5 mils for Mobil/Valspar 84-V-200, which is beyond the limits of 2 to 5 mils wet-film thickness that was allowed by the vendor instructions. Mobil/Valspar 84-V-200 was found to lack design basis testing and subsequent testing demonstrated that 50 percent of the coating in excess of 2 mils thickness failed as particulate, rather than chips, which increases debris loading on the containment sump. The licensee plans to revise calculation N001-1106-00002, Debris Generation Due to LOCA within Containment for Resolution of GSI-191, to incorporate the added debris loading from the unqualified coatings as a corrective action. This issue was entered into the licensee's corrective action program as Palo Verde Action Request 3469133. The performance deficiency was more than minor, and is therefore a finding, because it affected the design control attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective of ensuring the reliability and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, "Phase 1 - Initial Screening and Characterization of Findings," the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was evaluated as not having a crosscutting aspect because the performance deficiency is not reflective of current performance. Inspection Report# : 2010004 (pdf) Significance: Sep 10, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Operator Licensing Examination Integrity The inspectors identified a noncited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure that the integrity of an operating test administered to licensed operators was maintained. During the week of December 8, 2009, twenty-four licensed operators received three job performance measures and one additional licensed operator received five job performance measures for their operating tests that had been previously administered to other licensed operators in previous weeks. This failure resulted in a compromise of examination integrity because it exceeded the 50 percent overlap required by quality procedure LOCT-TPD-R56, Licensed Operator Continuing Training Program, Revision 56, for this portion of the examination, but did not lead to an actual effect on the equitable and consistent administration of the examination. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3527071. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely impacted the human performance attribute of the mitigating systems cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable

consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial examinations could be a precursor to a more significant event. Using Manual Chapter 0609, Significance Determination Process, Phase 1 worksheets, and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green) because, although the finding resulted in a compromise of the integrity of operating test job performance measures and compensatory actions were not immediately taken when the compromise should have been discovered in 2009, the equitable and consistent administration of the test was not actually impacted by this compromise. This finding has a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure that procedures were accurately translated from industry standards such that the 50 percent maximum overlap was not exceeded. Inspection Report# : 2010005 (pdf) Significance: Sep 09, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures for Medical Examinations of Licensed Operators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of the licensee to follow their quality procedure 01DP-0EM13, Licensed Operator Medical Examinations, Revision, which provides the medical examination requirements for licensed operators at Palo Verde Nuclear Generating Station. Of the 15 medical records reviewed by the inspectors, 7 licensed senior reactor operator medical records did not contain the proper no-solo restrictions imposed by the NRC when these individuals were licensed. Additionally, the software that the licensee used to track these restrictions (Station Work Management System or SWMS) did not reflect the proper restrictions for these 7 individuals. This issue was entered into the licensees corrective action program as Condition Report Disposition Requests 3527072 and 3526979. The failure of the licensees medical staff to follow their procedure for implementing the required medical examination program was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely impacted the human performance attribute of the mitigating systems cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609, Significance Determination Process, Phase 1 worksheets, and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance and is being characterized as a Green, noncited violation. The finding was determined to be Green, using Appendix I of Manual Chapter 0609, because more than 20 percent of the medical records reviewed contained significant deficiencies. The finding was also determined to have very low safety significance (Green) because: (1) the finding did not result in any events in the control room; and (2) no health requirements required by ANS/ANSI 3.4-1983 Medical Certification and Monitoring of Personnel Requiring Operator Licenses for Nuclear Power Plants were exceeded by any licensed operator while on watch. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because this procedure and its associated software are the two principle mechanisms that the facility uses to ensure that licensed operators are fit for duty. Inspection Report# : 2010005 (pdf) Significance: Aug 21, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality for Foreign Material in the Pneumatic Supply Lines to the Atmospheric Dump Valves Actuators The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly identify and correct a condition adverse to quality associated with foreign material in the nitrogen and instrument air supply to the atmospheric dump valve. Specifically, between July 2009 and August 2010, corrective actions to address foreign material in the Unit 3 instrument air supply to atmospheric dump valve ADV-185 failed to promptly identify and remove similar debris in remaining instrument air or nitrogen supply lines. The licensee is developing new work orders to flush and inspect pneumatic supply lines to the atmospheric dump valves. This issue was entered into the licensee's corrective action program as Palo Verde

Action Request 3531638. The performance deficiency was more than minor, and is therefore a finding, because it affected the equipment reliability attribute of the Mitigating Systems Cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the finding was determined to have a very low safety significance because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk-significant due to a seismic, flooding, or severe weather initiating event. This finding was determined to have a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to conduct effectiveness reviews of safety significant decisions to verify the validity of assumptions, identify possible unintended consequences, and determine how to improve future decisions. Inspection Report# : 2010004 (pdf) Barrier Integrity Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Include Screening Criteria in the Boric Acid Corrosion Control Program The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, that Instructions, procedures, or drawings shall include appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished. Specifically, Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, Revision 11 did not include appropriate screening criteria to satisfactorily evaluate boric acid leaks and deposits that may cause degradation of risk significant system barriers. The condition was placed in the corrective action program as Palo Verde Action Request 3691351. The inspectors determined the failure to include appropriate screening criteria into Procedure 70TI-9ZC01 was a performance deficiency. The performance deficiency is more than minor because it is associated with the procedure quality attribute of the Barrier Integrity Cornerstone and adversely affects the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding does not represent a degradation of a radiological barrier, does not represent a degradation of the control room toxic barrier functions, does not represent an actual open pathway of reactor containment, and does not involve an actual degradation of hydrogen igniters in the reactor containment. The finding includes a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to take appropriate corrective actions to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Specifically, the licensee identified similar deficiencies in the self assessment of the boric acid program in September 2010 however, failed to take appropriate corrective actions to fully correct the identified deficiencies. Inspection Report# : 2011003 (pdf) Significance: SL-IV Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Submit an LER for a Condition Prohibited by the Plants Technical Specifications The inspectors identified a Severity Level IV noncited violation of 10 CFR 50.73(a)(1) for failure to submit a Licensee Event Report within 60 days following discovery of a condition prohibited by Technical Specifications. The licensee made a procedure change in 1986 to Procedure 41OP-1HJ01, Control Room Handswitch/Valve Checklist, to maintain control room outside air dampers normally closed instead of the normally open position stipulated in the final safety analysis report. The inspectors concluded that the incorrect alignment of the dampers was a condition

prohibited by Technical Specification 3.3.9, Control Room Essential Filtration Actuation Signal and that the licensee failed to adequately evaluate the issue for reportability. The licensee entered the issue into the corrective action program as Palo Verde Action Request 3791486. The inspectors concluded the failure of Arizona Public Service to report a condition prohibited by Technical Specifications was a performance deficiency. The inspectors evaluated this performance deficiency using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the finding was a Severity Level IV violation because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011003 (pdf) Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Documentation for Verification of ASME Code Compliance The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion VII Control of Purchased Material, Equipment, And Services for the failure of licensee personnel to maintain radiographs onsite for the verification of ASME Code, Section III compliance. Specifically, radiographs for welds associated with the reactor head vent line were neither received nor reviewed as required. When the radiographs were obtained, reviews identified that welds for Units 1 and 2 did not meet the standards of Section III of the ASME Boiler and Pressure Vessel Code. The licensee corrected the non-conforming weld in Unit 2 during refueling outage 2R16 and Unit 1 welds will be restored to Section III standards during the next refueling outage beginning October 1, 2011. The licensee entered the issue into the corrective action program as Condition Report / Disposition Requests 3540575. Inspectors determined that the failure to maintain radiographs onsite for review was a performance deficiency. The performance deficiency was more than minor because it adversely affected the RCS equipment and barrier performance attribute of the Barrier Integrity Cornerstones objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because the reactor coolant system barrier remained intact, was not associated with the fuel barrier, and did not constitute a spent fuel pool issue. This finding had a cross-cutting aspect in the area of human performance associated with the work practices component because the licensee failed to communicate expectations regarding procedural compliance and personnel follow procedures. Inspection Report# : 2011003 (pdf) Emergency Preparedness Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Critique a Weakness during a Biennial Exercise The inspectors identified a Green noncited violation for failure to critique weak performance in the Technical Support Center during a biennial exercise conducted March 1, 2011, as required by 10 CFR Part 50, Appendix E, IV(F)(2)(g). Specifically, the licensee did not identify that the Technical Support Center did not understand the radiological release path and that they had developed ineffective mitigation strategies based on their inaccurate understanding. This performance deficiency is more than minor because it affected the emergency preparedness cornerstone and was associated with the emergency response organization performance attribute. The finding had a credible impact on the emergency preparedness cornerstone objective because a lack of understanding of the release path for radioactive material affects the licensees ability to implement adequate measures to protect the health and safety of the public. The finding was evaluated using the emergency preparedness significance determination process and was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was

associated with Emergency Planning Standard 50.47(b)(14), was not a risk significant planning standard issue, and was not a functional failure of the planning standard. The issue was entered into the licensees corrective action program as Condition Report / Disposition Requests 3693235. This finding was assigned a cross-cutting aspect in the area of problem identification and resolution because the licensee failed to identify a performance issue completely and accurately. Inspection Report# : 2011003 (pdf) Occupational Radiation Safety Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Procedures to Prevent Resin Contamination into the Auxiliary Building Exhaust Ventilation System Inspectors reviewed a self-revealing noncited violation of Technical Specification 5.4.1 for failure to have adequate procedures to prevent resin contamination of the auxiliary building exhaust ventilation system while filling and venting the pre-holdup ion exchanger. This event resulted in posting a high radiation area and unintended dose to radiation workers. Licensee immediate actions included posting the affected area as a high radiation area and decontamination of the affected area and duct. The event was placed in the licensees corrective action program as Condition Report Disposition Requests 3554716 and 3563863. The finding was more than minor because it was associated with the program and process attribute of the Occupational Radiation Safety Cornerstone and affected the objective to ensure the adequate protection of the worker health and safety from exposure to unintended radiation from radioactive material during routine civilian nuclear reactor operation. Using Manual Chapter 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding to have very low safety significance because: (1) it was not associated with ALARA planning or work controls; (2) there was no overexposure; (3) there was no substantial potential for an overexposure; and (4) the ability to assess dose was not compromised. The licensee previously had similar issues in Units 1 and 2 in 1985, 1995, and 1996 and, consequently, made modifications to procedures and equipment. These changes were not implemented in Unit 3. However, these issues are not indicative of current performance and thus, resulted in no crosscutting aspect. Inspection Report# : 2011002 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Dec 17, 2010

Identified By: NRC Item Type: FIN Finding Palo Verde Nuclear Generating Station Biennial PI&R Inspection Summary The team concluded that the corrective action program at Palo Verde Nuclear Generating Station was generally effective. The team concluded that site personnel identify problems at a low threshold and enter them into the corrective action program. The licensee utilizes a rigorous screening process to characterize issues and that the vast majority of issues are appropriately evaluated and adequate corrective actions are taken. The team did identify isolated cases where problem evaluation could have been more effective at addressing the underlying causes of issues as well as a number of examples where corrective actions were not timely or adequate to address identified problems. The team also determined that though the overall process for identifying and correcting issues was well established, certain incidents of procedural violations associated with corrective action program processes led to delays and less than adequate actions to correct material deficiencies. Though the team identified areas in which the licensee could improve its corrective action program, the overall process was determined to be effective in identifying and correcting conditions adverse to quality. The licensee appropriately evaluated industry operating experience for relevance to the facility, entered applicable items in the corrective action program, and subsequently utilized operating experience in root and apparent cause evaluations. The team did determine that that the licensee could improve its utilization of operating experience to prevent the occurrence of similar events at Palo Verde. The team determined that the licensee performed effective quality assurance audits and self assessments. The team performed seven safety culture focus group discussions involving approximately 70 licensee personnel in order to assess the safety conscious work environment of the site. The team felt that a strong safety conscious work environment existed in most of the work groups interviewed; however, one work group interviewed exhibited weaknesses in this area. Specifically, the team found that although there were many individuals who felt comfortable raising safety concerns without fear of retaliation, there were some individuals in the operations department who expressed the perception that they would or might be retaliated against for raising certain safety concerns using certain avenues available to them. In all instances, these individuals stated they would use one avenue or another to raise their concerns. Inspection Report# : 2010008 (pdf) Last modified : October 14, 2011

Palo Verde 3 3Q/2011 Plant Inspection Findings Initiating Events Significance: Jun 30, 2011 Identified By: Self-Revealing Item Type: FIN Finding Failure of 13.8kV Splice due to Inadequate Maintenance Inspectors reviewed a Green self-revealing finding for failure to properly repair a 13.8kV cable associated with the AENANX02 startup transformer. Specifically, the work performed failed to achieve an acceptable level of quality as required by Procedure 30DP-9MP01 Conduct of Maintenance, and as a result the splice failed causing valid actuations of the emergency diesel generators due to a partial loss of offsite power to both Unit 1 and Unit 3. The licensee plans to revise Specification 13-EN-306, Installation Specification for Cable Splicing and Terminations for PVNGS, to remove the use of taped splices for 13.8kV cable. The licensee entered this issue into the corrective action program as Condition Report / Disposition Requests 3616634. The failure of the licensee to perform work with an acceptable level of quality for 13.8kV cable splicing was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment reliability attribute of the Initiating Events Cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a cross-cutting aspect in the area of human performance associated with the resources component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for splicing of 13.8kV electrical cable. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: Self-Revealing Item Type: FIN Finding Inadequate Work Instructions for Condenser Coating The inspectors identified a self-revealing finding after Palo Verde Nuclear Generating Station failed to adequately perform maintenance activities associated with main condenser tube sheet coatings in Unit 3. As a result, a degraded tube was not replugged following coating and failed on January 15, 2011, resulting in high sodium levels in the condensate system. Operators entered the abnormal operating procedures for condenser tube rupture and reduced power to 40 percent power to facilitate troubleshooting and repairs. The licensee concluded that Work Order 3384533 and Procedure 31MT-9ZZ19, Tube Plugging of Secondary Heat Transfer Components, did not provide adequate instructions for the removal, accountability, and reinstallation of permanent plugs during maintenance. The licensee also concluded that engineering verification inspection practices were inadequate and no procedural guidance existed for the verification. The licensee completed repairs to the main condenser and returned Unit 3 to full power. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3580739 and implemented immediate corrective actions to revise the pre-job brief checklist and maintenance work instructions for condenser tube plugging. The licensee has not completed all corrective actions for this issue. The inspectors determined that the performance deficiency is more than minor because it affected the equipment reliability attribute of the Initiating Events Cornerstone and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a crosscutting aspect in the area of human performance associated with the resources

component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for tube sheet coating, replugging and verification. Inspection Report# : 2011002 (pdf) Mitigating Systems Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Complete an Immediate Operability Determination for Code System Leakage Test The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Contrary to the above, from March 11 through April 19, 2011, the licensee failed to complete an immediate operability determination in accordance with Procedure 01PR-0AP04, Corrective Action Program, when the licensee discovered the system leakage test methodology for the diesel fuel oil transfer system did not conform to ASME Code, Section XI testing requirements. This condition was placed in the corrective action program as Palo Verde Action Requests 3704003. The inspectors determined that the failure to complete an immediate operability determination in accordance with paragraph 3.2.1.5 of Procedure 01PR-0AP04 was a performance deficiency. The performance deficiency is more than minor because the nonconforming condition created a reasonable doubt on the operability of the diesel fuel oil transfer system. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding is a design or qualification deficiency confirmed not to result in the loss of operability or functionality of the system. The finding has a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to identify issues completely, accurately, and in a timely manner commensurate with their safety significance. Specifically, the licensee failed to accurately document the nonconforming condition identified in Palo Verde Action Requests 3654452 which led to a failure to complete an immediate operability determination as required. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Corrective Action Program Procedure The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criteria V, Instructions, Procedures, and Drawings, after the licensee failed to promptly evaluate a nonconforming condition for operability as required by Procedure 01PR-0AP04, Corrective Action Program. Procedure 01PR-0AP04, Corrective Action Program, step 3.2.1.5, stated Operability shall be determined immediately upon discovery that an SSC subject to technical specification or that supports SSCs subject to technical specification is in a degraded or nonconforming condition. Operators failed to perform an operability determination immediately following the licensees discovery of a potentially degraded and nonconforming condition associated with a manufacturing defect in K-600S 480 VAC Class 1E circuit breakers. On December 7, 2010, an extent of condition review identified 76 breakers installed in the three units that could be susceptible to the same failure mechanism. However, operators did not perform an immediate operability determination until January 28, 2011. Operators subsequently concluded the affected breakers remained capable of performing their safety functions. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3587124 and has not completed corrective actions for this issue. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined

the finding had a very low safety significance (Green) because it did not represent a loss of system safety function, represent actual loss of safety function of a single train for greater than its technical specification allowed outage time, represent an actual loss of safety function of one or more non-technical specification trains of equipment designated as risk-significant per 10 CFR 50.65 for greater than 24 hours, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors concluded that this finding had a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to implement a corrective action program with a low threshold for identifying issues. In this case, the licensee failed to initiate a Palo Verde Action Request that would have required a review for operability when the extent of condition review identified that safety-related components were affected. Inspection Report# : 2011002 (pdf) Significance: SL-IV Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform a 10 CFR Part 21 Evaluation The inspectors identified a Severity Level IV noncited violation of 10 CFR Part 21 after Palo Verde Nuclear Generating Station failed to evaluate an identified deviation within 60 days of discovery to determine if there was a substantial safety hazard. On November 23, 2010, the licensee completed an apparent cause evaluation for a failure of the Unit 3 train B spent fuel pool cooling pump and concluded the cause of the failure was a misalignment by the vendor of the bell alarm bracket within the K-600S 480 VAC Class 1E circuit breaker. Additionally, the apparent cause evaluation identified similar failures of the same type of breaker dating back to April 29, 2009. On December 7, 2010, the extent of condition review identified seventy six breakers, including some in safety related applications, installed in the three units that could be impacted by the same failure mechanism. The inspectors questioned whether the licensee should have performed an evaluation in accordance with 10 CFR Part 21 to determine if a defect existed. On February 15, 2011, the licensee completed an evaluation of prior deviations related to the alignment of bell alarm switches and concluded the deviations were defects that were reportable per 10 CFR Part 21. The licensee subsequently submitted Part 21 Report 2011-07-00 on February 24, 2011. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3593672 and has not completed corrective actions for this issue. The inspectors concluded that the failure to perform the substantial safety hazard evaluation within 60 days as required by 10 CFR 21.21(a)(1) was a violation of NRC requirements. The inspectors evaluated this violation using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the violation was a Severity Level IV because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011002 (pdf) Significance: SL-IV Feb 08, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Ensure All License Conditions Are Met for Licensed Operators The inspectors identified a Severity Level IV violation of 10 CFR 55.3, License Requirements, for the failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators was not met for three licensed operators. Two of these licensed operators performed licensed operator duties 42 times between February 8 and March 25, 2010, after the deadline for their biennial examinations had passed. Upon discovery, the licensee removed these individuals from watchstanding duties pending follow-up medical evaluations. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3526981. The failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3 is a performance deficiency. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators (as required in 10 CFR 55.21) was not met for three licensed operators, two of

which were standing watch with expired medical examinations. The finding was evaluated using the traditional enforcement process because the failure to determine an operators medical condition and general health has the potential to impact the NRCs ability to perform its regulatory function; the NRC was not notified nor allowed an opportunity to review the specific medical conditions of the two operators whose medical qualifications had expired while they were standing watch or eligible to stand watch. Using the NRCs Enforcement Policy, section 6.4.d, Severity Level IV violation examples, this finding is similar to example 1 which states, in part that an unqualified individual performing the functions of an operator or senior operator. Two licensed operators stood watch without a certified medical examination within the two year period that the medical examination is required to be completed and certified by the physician. Because: (1) the medical conditions of the two licensed operators did not change when they received their medical examinations in recent weeks; (2) the finding did not cause any plant events or transients while the individuals were on watch; (3) it was not repetitive or willful; and (4) it was entered into the corrective action program, the finding was determined to be of very low safety significance and is being treated as a Severity Level IV noncited violation consistent with the NRC Enforcement Policy. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because medical staff supervisors did not oversee the biennial physical examination due dates such that nuclear safety was supported. Inspection Report# : 2010005 (pdf) Significance: Nov 15, 2010 Identified By: NRC Item Type: NCV NonCited Violation Failure to Promptly Correct a Condition Adverse to Quality for the Essential Cooling Water Room Cooler The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the failure of engineering personnel to promptly correct a condition adverse to quality associated with room cooler AHU-3MHAAZ05 blower shaft dimensions. Specifically, between July 2008 and November 2010, corrective actions for high vibrations in the Unit 3 essential cooling water system train A room cooler blower failed to promptly address the incorrect shaft dimensions at the bearing shaft interface. The licensee is developing corrective actions to replace the defective shaft by procuring a new shaft or machining a shaft on site. The licensee entered this issue into the corrective action program as Palo Verde Action Request 3559219. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone, and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Manual Chapter 0609.04, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined the finding had a very low safety significance (Green) because the finding did not result in a loss of system safety function, an actual loss of safety function of a single train for greater than its technical specification allowed outage time, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding had a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure that personnel, equipment, and procedure were available and adequate to assure nuclear safety by minimizing long standing equipment issues. Inspection Report# : 2010005 (pdf) Barrier Integrity Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Include Screening Criteria in the Boric Acid Corrosion Control Program The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, that Instructions, procedures, or drawings shall include appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished. Specifically, Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, Revision 11 did not include appropriate screening criteria to satisfactorily evaluate boric acid leaks and deposits that may cause degradation of risk significant system barriers. The condition was placed in the corrective action program as Palo

Verde Action Request 3691351. The inspectors determined the failure to include appropriate screening criteria into Procedure 70TI-9ZC01 was a performance deficiency. The performance deficiency is more than minor because it is associated with the procedure quality attribute of the Barrier Integrity Cornerstone and adversely affects the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding does not represent a degradation of a radiological barrier, does not represent a degradation of the control room toxic barrier functions, does not represent an actual open pathway of reactor containment, and does not involve an actual degradation of hydrogen igniters in the reactor containment. The finding includes a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to take appropriate corrective actions to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Specifically, the licensee identified similar deficiencies in the self assessment of the boric acid program in September 2010 however, failed to take appropriate corrective actions to fully correct the identified deficiencies. Inspection Report# : 2011003 (pdf) Significance: SL-IV Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Submit an LER for a Condition Prohibited by the Plants Technical Specifications The inspectors identified a Severity Level IV noncited violation of 10 CFR 50.73(a)(1) for failure to submit a Licensee Event Report within 60 days following discovery of a condition prohibited by Technical Specifications. The licensee made a procedure change in 1986 to Procedure 41OP-1HJ01, Control Room Handswitch/Valve Checklist, to maintain control room outside air dampers normally closed instead of the normally open position stipulated in the final safety analysis report. The inspectors concluded that the incorrect alignment of the dampers was a condition prohibited by Technical Specification 3.3.9, Control Room Essential Filtration Actuation Signal and that the licensee failed to adequately evaluate the issue for reportability. The licensee entered the issue into the corrective action program as Palo Verde Action Request 3791486. The inspectors concluded the failure of Arizona Public Service to report a condition prohibited by Technical Specifications was a performance deficiency. The inspectors evaluated this performance deficiency using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the finding was a Severity Level IV violation because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011003 (pdf) Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Documentation for Verification of ASME Code Compliance The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion VII Control of Purchased Material, Equipment, And Services for the failure of licensee personnel to maintain radiographs onsite for the verification of ASME Code, Section III compliance. Specifically, radiographs for welds associated with the reactor head vent line were neither received nor reviewed as required. When the radiographs were obtained, reviews identified that welds for Units 1 and 2 did not meet the standards of Section III of the ASME Boiler and Pressure Vessel Code. The licensee corrected the non-conforming weld in Unit 2 during refueling outage 2R16 and Unit 1 welds will be restored to Section III standards during the next refueling outage beginning October 1, 2011. The licensee entered the issue into the corrective action program as Condition Report / Disposition Requests 3540575. Inspectors determined that the failure to maintain radiographs onsite for review was a performance deficiency. The performance deficiency was more than minor because it adversely affected the RCS equipment and barrier performance attribute of the Barrier Integrity Cornerstones objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Inspection Manual

Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because the reactor coolant system barrier remained intact, was not associated with the fuel barrier, and did not constitute a spent fuel pool issue. This finding had a cross-cutting aspect in the area of human performance associated with the work practices component because the licensee failed to communicate expectations regarding procedural compliance and personnel follow procedures. Inspection Report# : 2011003 (pdf) Emergency Preparedness Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Critique a Weakness during a Biennial Exercise The inspectors identified a Green noncited violation for failure to critique weak performance in the Technical Support Center during a biennial exercise conducted March 1, 2011, as required by 10 CFR Part 50, Appendix E, IV(F)(2)(g). Specifically, the licensee did not identify that the Technical Support Center did not understand the radiological release path and that they had developed ineffective mitigation strategies based on their inaccurate understanding. This performance deficiency is more than minor because it affected the emergency preparedness cornerstone and was associated with the emergency response organization performance attribute. The finding had a credible impact on the emergency preparedness cornerstone objective because a lack of understanding of the release path for radioactive material affects the licensees ability to implement adequate measures to protect the health and safety of the public. The finding was evaluated using the emergency preparedness significance determination process and was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was associated with Emergency Planning Standard 50.47(b)(14), was not a risk significant planning standard issue, and was not a functional failure of the planning standard. The issue was entered into the licensees corrective action program as Condition Report / Disposition Requests 3693235. This finding was assigned a cross-cutting aspect in the area of problem identification and resolution because the licensee failed to identify a performance issue completely and accurately. Inspection Report# : 2011003 (pdf) Occupational Radiation Safety Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Procedures to Prevent Resin Contamination into the Auxiliary Building Exhaust Ventilation System Inspectors reviewed a self-revealing noncited violation of Technical Specification 5.4.1 for failure to have adequate procedures to prevent resin contamination of the auxiliary building exhaust ventilation system while filling and venting the pre-holdup ion exchanger. This event resulted in posting a high radiation area and unintended dose to radiation workers. Licensee immediate actions included posting the affected area as a high radiation area and decontamination of the affected area and duct. The event was placed in the licensees corrective action program as Condition Report Disposition Requests 3554716 and 3563863. The finding was more than minor because it was associated with the program and process attribute of the Occupational Radiation Safety Cornerstone and affected the objective to ensure the adequate protection of the worker health and safety from exposure to unintended radiation from radioactive material during routine civilian nuclear reactor operation. Using Manual Chapter 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding to have very low safety significance because: (1) it was

not associated with ALARA planning or work controls; (2) there was no overexposure; (3) there was no substantial potential for an overexposure; and (4) the ability to assess dose was not compromised. The licensee previously had similar issues in Units 1 and 2 in 1985, 1995, and 1996 and, consequently, made modifications to procedures and equipment. These changes were not implemented in Unit 3. However, these issues are not indicative of current performance and thus, resulted in no crosscutting aspect. Inspection Report# : 2011002 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A Dec 17, 2010 Identified By: NRC Item Type: FIN Finding Palo Verde Nuclear Generating Station Biennial PI&R Inspection Summary The team concluded that the corrective action program at Palo Verde Nuclear Generating Station was generally effective. The team concluded that site personnel identify problems at a low threshold and enter them into the corrective action program. The licensee utilizes a rigorous screening process to characterize issues and that the vast majority of issues are appropriately evaluated and adequate corrective actions are taken. The team did identify isolated cases where problem evaluation could have been more effective at addressing the underlying causes of issues as well as a number of examples where corrective actions were not timely or adequate to address identified problems. The team also determined that though the overall process for identifying and correcting issues was well established, certain incidents of procedural violations associated with corrective action program processes led to delays and less than adequate actions to correct material deficiencies. Though the team identified areas in which the licensee could improve its corrective action program, the overall process was determined to be effective in identifying and correcting conditions adverse to quality. The licensee appropriately evaluated industry operating experience for relevance to the facility, entered applicable items in the corrective action program, and subsequently utilized operating experience in root and apparent cause evaluations. The team did determine that that the licensee could improve its utilization of operating experience to prevent the occurrence of similar events at Palo Verde. The team determined that the licensee performed effective quality assurance audits and self assessments. The team performed seven safety culture focus group discussions involving approximately 70 licensee personnel in order to assess the safety conscious work environment of the site. The team felt that a strong safety conscious work environment existed in most of the work groups interviewed; however, one work group interviewed exhibited weaknesses in this area. Specifically, the team found that although there were many individuals who felt comfortable raising safety concerns without fear of retaliation, there were some individuals in the operations department who expressed the perception that they would or might be retaliated against for raising certain safety concerns using certain avenues available to them. In all instances, these individuals stated they would use one avenue or another to raise their concerns. Inspection Report# : 2010008 (pdf)

Last modified : January 04, 2012 Palo Verde 3 4Q/2011 Plant Inspection Findings Initiating Events Significance: Jun 30, 2011 Identified By: Self-Revealing Item Type: FIN Finding Failure of 13.8kV Splice due to Inadequate Maintenance Inspectors reviewed a Green self-revealing finding for failure to properly repair a 13.8kV cable associated with the AENANX02 startup transformer. Specifically, the work performed failed to achieve an acceptable level of quality as required by Procedure 30DP-9MP01 Conduct of Maintenance, and as a result the splice failed causing valid actuations of the emergency diesel generators due to a partial loss of offsite power to both Unit 1 and Unit 3. The licensee plans to revise Specification 13-EN-306, Installation Specification for Cable Splicing and Terminations for PVNGS, to remove the use of taped splices for 13.8kV cable. The licensee entered this issue into the corrective action program as Condition Report / Disposition Requests 3616634. The failure of the licensee to perform work with an acceptable level of quality for 13.8kV cable splicing was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment reliability attribute of the Initiating Events Cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a cross-cutting aspect in the area of human performance associated with the resources component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for splicing of 13.8kV electrical cable. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: Self-Revealing Item Type: FIN Finding Inadequate Work Instructions for Condenser Coating The inspectors identified a self-revealing finding after Palo Verde Nuclear Generating Station failed to adequately perform maintenance activities associated with main condenser tube sheet coatings in Unit 3. As a result, a degraded tube was not replugged following coating and failed on January 15, 2011, resulting in high sodium levels in the condensate system. Operators entered the abnormal operating procedures for condenser tube rupture and reduced power to 40 percent power to facilitate troubleshooting and repairs. The licensee concluded that Work Order 3384533 and Procedure 31MT-9ZZ19, Tube Plugging of Secondary Heat Transfer Components, did not provide adequate instructions for the removal, accountability, and reinstallation of permanent plugs during maintenance. The licensee also concluded that engineering verification inspection practices were inadequate and no procedural guidance existed for the verification. The licensee completed repairs to the main condenser and returned Unit 3 to full power. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3580739 and implemented immediate corrective actions to revise the pre-job brief checklist and maintenance work instructions for condenser tube plugging. The licensee has not completed all corrective actions for this issue. The inspectors determined that the performance deficiency is more than minor because it affected the equipment reliability attribute of the Initiating Events Cornerstone and affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a crosscutting aspect in the area of human performance associated with the resources

component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for tube sheet coating, replugging and verification. Inspection Report# : 2011002 (pdf) Mitigating Systems Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Complete an Immediate Operability Determination for Code System Leakage Test The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Contrary to the above, from March 11 through April 19, 2011, the licensee failed to complete an immediate operability determination in accordance with Procedure 01PR-0AP04, Corrective Action Program, when the licensee discovered the system leakage test methodology for the diesel fuel oil transfer system did not conform to ASME Code, Section XI testing requirements. This condition was placed in the corrective action program as Palo Verde Action Requests 3704003. The inspectors determined that the failure to complete an immediate operability determination in accordance with paragraph 3.2.1.5 of Procedure 01PR-0AP04 was a performance deficiency. The performance deficiency is more than minor because the nonconforming condition created a reasonable doubt on the operability of the diesel fuel oil transfer system. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding is a design or qualification deficiency confirmed not to result in the loss of operability or functionality of the system. The finding has a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to identify issues completely, accurately, and in a timely manner commensurate with their safety significance. Specifically, the licensee failed to accurately document the nonconforming condition identified in Palo Verde Action Requests 3654452 which led to a failure to complete an immediate operability determination as required. Inspection Report# : 2011003 (pdf) Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Corrective Action Program Procedure The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criteria V, Instructions, Procedures, and Drawings, after the licensee failed to promptly evaluate a nonconforming condition for operability as required by Procedure 01PR-0AP04, Corrective Action Program. Procedure 01PR-0AP04, Corrective Action Program, step 3.2.1.5, stated Operability shall be determined immediately upon discovery that an SSC subject to technical specification or that supports SSCs subject to technical specification is in a degraded or nonconforming condition. Operators failed to perform an operability determination immediately following the licensees discovery of a potentially degraded and nonconforming condition associated with a manufacturing defect in K-600S 480 VAC Class 1E circuit breakers. On December 7, 2010, an extent of condition review identified 76 breakers installed in the three units that could be susceptible to the same failure mechanism. However, operators did not perform an immediate operability determination until January 28, 2011. Operators subsequently concluded the affected breakers remained capable of performing their safety functions. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3587124 and has not completed corrective actions for this issue. The inspectors concluded the finding was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using NRC Manual Chapter 0609, Attachment 4, Phase 1 - Initial Screening and Characterization of Findings, the inspectors determined

the finding had a very low safety significance (Green) because it did not represent a loss of system safety function, represent actual loss of safety function of a single train for greater than its technical specification allowed outage time, represent an actual loss of safety function of one or more non-technical specification trains of equipment designated as risk-significant per 10 CFR 50.65 for greater than 24 hours, or screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors concluded that this finding had a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to implement a corrective action program with a low threshold for identifying issues. In this case, the licensee failed to initiate a Palo Verde Action Request that would have required a review for operability when the extent of condition review identified that safety-related components were affected. Inspection Report# : 2011002 (pdf) Significance: SL-IV Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform a 10 CFR Part 21 Evaluation The inspectors identified a Severity Level IV noncited violation of 10 CFR Part 21 after Palo Verde Nuclear Generating Station failed to evaluate an identified deviation within 60 days of discovery to determine if there was a substantial safety hazard. On November 23, 2010, the licensee completed an apparent cause evaluation for a failure of the Unit 3 train B spent fuel pool cooling pump and concluded the cause of the failure was a misalignment by the vendor of the bell alarm bracket within the K-600S 480 VAC Class 1E circuit breaker. Additionally, the apparent cause evaluation identified similar failures of the same type of breaker dating back to April 29, 2009. On December 7, 2010, the extent of condition review identified seventy six breakers, including some in safety related applications, installed in the three units that could be impacted by the same failure mechanism. The inspectors questioned whether the licensee should have performed an evaluation in accordance with 10 CFR Part 21 to determine if a defect existed. On February 15, 2011, the licensee completed an evaluation of prior deviations related to the alignment of bell alarm switches and concluded the deviations were defects that were reportable per 10 CFR Part 21. The licensee subsequently submitted Part 21 Report 2011-07-00 on February 24, 2011. The licensee entered the performance deficiency into the corrective action program as Palo Verde Action Request 3593672 and has not completed corrective actions for this issue. The inspectors concluded that the failure to perform the substantial safety hazard evaluation within 60 days as required by 10 CFR 21.21(a)(1) was a violation of NRC requirements. The inspectors evaluated this violation using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the violation was a Severity Level IV because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011002 (pdf) Significance: SL-IV Feb 08, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Ensure All License Conditions Are Met for Licensed Operators The inspectors identified a Severity Level IV violation of 10 CFR 55.3, License Requirements, for the failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators was not met for three licensed operators. Two of these licensed operators performed licensed operator duties 42 times between February 8 and March 25, 2010, after the deadline for their biennial examinations had passed. Upon discovery, the licensee removed these individuals from watchstanding duties pending follow-up medical evaluations. This issue was entered into the licensees corrective action program as Condition Report Disposition Request 3526981. The failure of the licensee to ensure that all individuals authorized by a license to operate the controls of the facility met all the conditions of their licenses as defined in 10 CFR 55.3 is a performance deficiency. Specifically, the requirement to have a biennial physical completed and certified by the facilitys physician during the continuous two year period for all licensed operators (as required in 10 CFR 55.21) was not met for three licensed operators, two of

which were standing watch with expired medical examinations. The finding was evaluated using the traditional enforcement process because the failure to determine an operators medical condition and general health has the potential to impact the NRCs ability to perform its regulatory function; the NRC was not notified nor allowed an opportunity to review the specific medical conditions of the two operators whose medical qualifications had expired while they were standing watch or eligible to stand watch. Using the NRCs Enforcement Policy, section 6.4.d, Severity Level IV violation examples, this finding is similar to example 1 which states, in part that an unqualified individual performing the functions of an operator or senior operator. Two licensed operators stood watch without a certified medical examination within the two year period that the medical examination is required to be completed and certified by the physician. Because: (1) the medical conditions of the two licensed operators did not change when they received their medical examinations in recent weeks; (2) the finding did not cause any plant events or transients while the individuals were on watch; (3) it was not repetitive or willful; and (4) it was entered into the corrective action program, the finding was determined to be of very low safety significance and is being treated as a Severity Level IV noncited violation consistent with the NRC Enforcement Policy. This finding has a crosscutting aspect in the area of human performance associated with the work practices component because medical staff supervisors did not oversee the biennial physical examination due dates such that nuclear safety was supported. Inspection Report# : 2010005 (pdf) Barrier Integrity Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Include Screening Criteria in the Boric Acid Corrosion Control Program The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, that Instructions, procedures, or drawings shall include appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished. Specifically, Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, Revision 11 did not include appropriate screening criteria to satisfactorily evaluate boric acid leaks and deposits that may cause degradation of risk significant system barriers. The condition was placed in the corrective action program as Palo Verde Action Request 3691351. The inspectors determined the failure to include appropriate screening criteria into Procedure 70TI-9ZC01 was a performance deficiency. The performance deficiency is more than minor because it is associated with the procedure quality attribute of the Barrier Integrity Cornerstone and adversely affects the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding does not represent a degradation of a radiological barrier, does not represent a degradation of the control room toxic barrier functions, does not represent an actual open pathway of reactor containment, and does not involve an actual degradation of hydrogen igniters in the reactor containment. The finding includes a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to take appropriate corrective actions to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Specifically, the licensee identified similar deficiencies in the self assessment of the boric acid program in September 2010 however, failed to take appropriate corrective actions to fully correct the identified deficiencies. Inspection Report# : 2011003 (pdf) Significance: SL-IV Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Submit an LER for a Condition Prohibited by the Plants Technical Specifications The inspectors identified a Severity Level IV noncited violation of 10 CFR 50.73(a)(1) for failure to submit a Licensee Event Report within 60 days following discovery of a condition prohibited by Technical Specifications. The licensee made a procedure change in 1986 to Procedure 41OP-1HJ01, Control Room Handswitch/Valve Checklist,

to maintain control room outside air dampers normally closed instead of the normally open position stipulated in the final safety analysis report. The inspectors concluded that the incorrect alignment of the dampers was a condition prohibited by Technical Specification 3.3.9, Control Room Essential Filtration Actuation Signal and that the licensee failed to adequately evaluate the issue for reportability. The licensee entered the issue into the corrective action program as Palo Verde Action Request 3791486. The inspectors concluded the failure of Arizona Public Service to report a condition prohibited by Technical Specifications was a performance deficiency. The inspectors evaluated this performance deficiency using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the finding was a Severity Level IV violation because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011003 (pdf) Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Documentation for Verification of ASME Code Compliance The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion VII Control of Purchased Material, Equipment, And Services for the failure of licensee personnel to maintain radiographs onsite for the verification of ASME Code, Section III compliance. Specifically, radiographs for welds associated with the reactor head vent line were neither received nor reviewed as required. When the radiographs were obtained, reviews identified that welds for Units 1 and 2 did not meet the standards of Section III of the ASME Boiler and Pressure Vessel Code. The licensee corrected the non-conforming weld in Unit 2 during refueling outage 2R16 and Unit 1 welds will be restored to Section III standards during the next refueling outage beginning October 1, 2011. The licensee entered the issue into the corrective action program as Condition Report / Disposition Requests 3540575. Inspectors determined that the failure to maintain radiographs onsite for review was a performance deficiency. The performance deficiency was more than minor because it adversely affected the RCS equipment and barrier performance attribute of the Barrier Integrity Cornerstones objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because the reactor coolant system barrier remained intact, was not associated with the fuel barrier, and did not constitute a spent fuel pool issue. This finding had a cross-cutting aspect in the area of human performance associated with the work practices component because the licensee failed to communicate expectations regarding procedural compliance and personnel follow procedures. Inspection Report# : 2011003 (pdf) Emergency Preparedness Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Critique a Weakness during a Biennial Exercise The inspectors identified a Green noncited violation for failure to critique weak performance in the Technical Support Center during a biennial exercise conducted March 1, 2011, as required by 10 CFR Part 50, Appendix E, IV(F)(2)(g). Specifically, the licensee did not identify that the Technical Support Center did not understand the radiological release path and that they had developed ineffective mitigation strategies based on their inaccurate understanding. This performance deficiency is more than minor because it affected the emergency preparedness cornerstone and was associated with the emergency response organization performance attribute. The finding had a credible impact on the emergency preparedness cornerstone objective because a lack of understanding of the release path for radioactive material affects the licensees ability to implement adequate measures to protect the health and safety of the public.

The finding was evaluated using the emergency preparedness significance determination process and was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was associated with Emergency Planning Standard 50.47(b)(14), was not a risk significant planning standard issue, and was not a functional failure of the planning standard. The issue was entered into the licensees corrective action program as Condition Report / Disposition Requests 3693235. This finding was assigned a cross-cutting aspect in the area of problem identification and resolution because the licensee failed to identify a performance issue completely and accurately. Inspection Report# : 2011003 (pdf) Occupational Radiation Safety Significance: Mar 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Procedures to Prevent Resin Contamination into the Auxiliary Building Exhaust Ventilation System Inspectors reviewed a self-revealing noncited violation of Technical Specification 5.4.1 for failure to have adequate procedures to prevent resin contamination of the auxiliary building exhaust ventilation system while filling and venting the pre-holdup ion exchanger. This event resulted in posting a high radiation area and unintended dose to radiation workers. Licensee immediate actions included posting the affected area as a high radiation area and decontamination of the affected area and duct. The event was placed in the licensees corrective action program as Condition Report Disposition Requests 3554716 and 3563863. The finding was more than minor because it was associated with the program and process attribute of the Occupational Radiation Safety Cornerstone and affected the objective to ensure the adequate protection of the worker health and safety from exposure to unintended radiation from radioactive material during routine civilian nuclear reactor operation. Using Manual Chapter 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding to have very low safety significance because: (1) it was not associated with ALARA planning or work controls; (2) there was no overexposure; (3) there was no substantial potential for an overexposure; and (4) the ability to assess dose was not compromised. The licensee previously had similar issues in Units 1 and 2 in 1985, 1995, and 1996 and, consequently, made modifications to procedures and equipment. These changes were not implemented in Unit 3. However, these issues are not indicative of current performance and thus, resulted in no crosscutting aspect. Inspection Report# : 2011002 (pdf) Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous

Last modified : March 02, 2012 Palo Verde 3 1Q/2012 Plant Inspection Findings Initiating Events Significance: Dec 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Perform Testing for the Gaseous Radwaste System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, for the failure of the licensee to assure that all required testing for the gaseous radwaste (GR) system was identified and performed in accordance with written test procedures which incorporated the requirements and acceptance limits contained in applicable design documentation. Specifically, from May 1995 to October 26, 2011, the licensee did not identify nor perform functional testing on GR system equipment which is credited in the Updated Final Safety Analysis Report (UFSAR) to preclude the internal hydrogen explosion event. The licensee developed written test procedures and successfully completed appropriate functional tests on all three units as a corrective action to restore compliance. The licensee documented their corrective actions for this issue in Palo Verde Action Requests 3440072, 3931118, and 4004489. The licensees failure to perform functional testing on GR system equipment was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it is associated with the Initiating Events Cornerstone attribute of procedure quality in the area of testing procedure adequacy and it adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Specifically, the lack of having functional testing on GR system components could result in a credible hydrogen explosion event which could initiate a radiological release. Using Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process, the finding was determined to have very low safety significance (Green) because the condition represented a low degradation rating due to the fact that nitrogen dilution valves and compressor auto trip features all passed recent functional testing successfully. This finding has no cross-cutting aspect assigned because the finding is not reflective of current performance. Inspection Report# : 2011005 (pdf) Significance: Jun 30, 2011 Identified By: Self-Revealing Item Type: FIN Finding Failure of 13.8kV Splice due to Inadequate Maintenance Inspectors reviewed a Green self-revealing finding for failure to properly repair a 13.8kV cable associated with the AENANX02 startup transformer. Specifically, the work performed failed to achieve an acceptable level of quality as required by Procedure 30DP-9MP01 Conduct of Maintenance, and as a result the splice failed causing valid actuations of the emergency diesel generators due to a partial loss of offsite power to both Unit 1 and Unit 3. The licensee plans to revise Specification 13-EN-306, Installation Specification for Cable Splicing and Terminations for PVNGS, to remove the use of taped splices for 13.8kV cable. The licensee entered this issue into the corrective action program as Condition Report / Disposition Requests 3616634. The failure of the licensee to perform work with an acceptable level of quality for 13.8kV cable splicing was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment reliability attribute of the Initiating Events Cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. This finding had a cross-cutting aspect in the area of human performance associated with the resources component because the licensee failed to provide complete, accurate and up-to-date procedures and work packages for

splicing of 13.8kV electrical cable. Inspection Report# : 2011003 (pdf) Mitigating Systems Significance: Jan 25, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Functionality Assessment for Safety-Related Buildings DRAFT: The inspectors identified a green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide a technical justification for continued operation of a degraded structure, system, or component. Specifically, after identifying a potential for insufficient drainage for safety related building roofs and no supporting documentation, plant personnel failed to perform a functional assessment and failed to assess the nonconforming condition to the current licensing basis. The licensee performed the functional assessment when notified one needed to be preformed and revised the assessment to incorporate all relevant information to as corrective action to restore compliance. The licensee entered the issue into the corrective action program as Palo Verde Action Requests 3958463 and 3952605. The inspectors concluded that the failure of the operations and engineering personnel to evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors concluded that the failure of the operations and engineering personnel to evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the component of decision making because the licensee failed to use conservative assumptions in decision making and adopts a requirement to demonstrate that the proposed action is safe in order to proceed rather than a requirement to demonstrate that it is unsafe in order to disapprove the action. Inspection Report# : 2012002 (pdf) Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Complete an Immediate Operability Determination for Code System Leakage Test The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Contrary to the above, from March 11 through April 19, 2011, the licensee failed to complete an immediate operability determination in accordance with Procedure 01PR-0AP04, Corrective Action Program, when the licensee discovered the system leakage test methodology for the diesel fuel oil transfer system did not conform to ASME Code, Section XI testing requirements. This condition was placed in the corrective action program as Palo Verde Action Requests 3704003. The inspectors determined that the failure to complete an immediate operability determination in accordance with

paragraph 3.2.1.5 of Procedure 01PR-0AP04 was a performance deficiency. The performance deficiency is more than minor because the nonconforming condition created a reasonable doubt on the operability of the diesel fuel oil transfer system. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding is a design or qualification deficiency confirmed not to result in the loss of operability or functionality of the system. The finding has a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to identify issues completely, accurately, and in a timely manner commensurate with their safety significance. Specifically, the licensee failed to accurately document the nonconforming condition identified in Palo Verde Action Requests 3654452 which led to a failure to complete an immediate operability determination as required. Inspection Report# : 2011003 (pdf) Barrier Integrity Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Include Screening Criteria in the Boric Acid Corrosion Control Program The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, that Instructions, procedures, or drawings shall include appropriate quantitative or qualitative acceptance criteria for determining that important activities have been satisfactorily accomplished. Specifically, Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, Revision 11 did not include appropriate screening criteria to satisfactorily evaluate boric acid leaks and deposits that may cause degradation of risk significant system barriers. The condition was placed in the corrective action program as Palo Verde Action Request 3691351. The inspectors determined the failure to include appropriate screening criteria into Procedure 70TI-9ZC01 was a performance deficiency. The performance deficiency is more than minor because it is associated with the procedure quality attribute of the Barrier Integrity Cornerstone and adversely affects the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Phase 1 of NRC Manual Chapter 0609, Significance Determination Process, the finding screens as having very low safety significance (Green) because the finding does not represent a degradation of a radiological barrier, does not represent a degradation of the control room toxic barrier functions, does not represent an actual open pathway of reactor containment, and does not involve an actual degradation of hydrogen igniters in the reactor containment. The finding includes a cross-cutting aspect in the area of problem identification and resolution, associated with the corrective action program component, because the licensee failed to take appropriate corrective actions to address safety issues and adverse trends in a timely manner, commensurate with their safety significance and complexity. Specifically, the licensee identified similar deficiencies in the self assessment of the boric acid program in September 2010 however, failed to take appropriate corrective actions to fully correct the identified deficiencies. Inspection Report# : 2011003 (pdf) Significance: SL-IV Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Submit an LER for a Condition Prohibited by the Plants Technical Specifications The inspectors identified a Severity Level IV noncited violation of 10 CFR 50.73(a)(1) for failure to submit a Licensee Event Report within 60 days following discovery of a condition prohibited by Technical Specifications. The licensee made a procedure change in 1986 to Procedure 41OP-1HJ01, Control Room Handswitch/Valve Checklist, to maintain control room outside air dampers normally closed instead of the normally open position stipulated in the final safety analysis report. The inspectors concluded that the incorrect alignment of the dampers was a condition prohibited by Technical Specification 3.3.9, Control Room Essential Filtration Actuation Signal and that the licensee failed to adequately evaluate the issue for reportability. The licensee entered the issue into the corrective action program as Palo Verde Action Request 3791486.

The inspectors concluded the failure of Arizona Public Service to report a condition prohibited by Technical Specifications was a performance deficiency. The inspectors evaluated this performance deficiency using the traditional enforcement process because the failure to submit a required report affected the NRCs ability to perform its regulatory function. Consistent with the guidance in Section 2.2.2 and Section 6.9.d of the NRC Enforcement Policy, the inspectors concluded the finding was a Severity Level IV violation because the licensee failed to make a timely written report that resulted in no or relatively inappreciable potential safety consequences. Inspection Report# : 2011003 (pdf) Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Have Adequate Documentation for Verification of ASME Code Compliance The inspectors identified a Green noncited violation of 10 CFR Part 50, Appendix B, Criterion VII Control of Purchased Material, Equipment, And Services for the failure of licensee personnel to maintain radiographs onsite for the verification of ASME Code, Section III compliance. Specifically, radiographs for welds associated with the reactor head vent line were neither received nor reviewed as required. When the radiographs were obtained, reviews identified that welds for Units 1 and 2 did not meet the standards of Section III of the ASME Boiler and Pressure Vessel Code. The licensee corrected the non-conforming weld in Unit 2 during refueling outage 2R16 and Unit 1 welds will be restored to Section III standards during the next refueling outage beginning October 1, 2011. The licensee entered the issue into the corrective action program as Condition Report / Disposition Requests 3540575. Inspectors determined that the failure to maintain radiographs onsite for review was a performance deficiency. The performance deficiency was more than minor because it adversely affected the RCS equipment and barrier performance attribute of the Barrier Integrity Cornerstones objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Inspection Manual Chapter 0609, Attachment 4, Initial Screening and Characterization of Findings, the inspectors concluded that the finding is of very low safety significance (Green) because the reactor coolant system barrier remained intact, was not associated with the fuel barrier, and did not constitute a spent fuel pool issue. This finding had a cross-cutting aspect in the area of human performance associated with the work practices component because the licensee failed to communicate expectations regarding procedural compliance and personnel follow procedures. Inspection Report# : 2011003 (pdf) Emergency Preparedness Significance: Jun 30, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Critique a Weakness during a Biennial Exercise The inspectors identified a Green noncited violation for failure to critique weak performance in the Technical Support Center during a biennial exercise conducted March 1, 2011, as required by 10 CFR Part 50, Appendix E, IV(F)(2)(g). Specifically, the licensee did not identify that the Technical Support Center did not understand the radiological release path and that they had developed ineffective mitigation strategies based on their inaccurate understanding. This performance deficiency is more than minor because it affected the emergency preparedness cornerstone and was associated with the emergency response organization performance attribute. The finding had a credible impact on the emergency preparedness cornerstone objective because a lack of understanding of the release path for radioactive material affects the licensees ability to implement adequate measures to protect the health and safety of the public. The finding was evaluated using the emergency preparedness significance determination process and was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was associated with Emergency Planning Standard 50.47(b)(14), was not a risk significant planning standard issue, and was not a functional failure of the planning standard. The issue was entered into the licensees corrective action program as Condition Report / Disposition Requests 3693235. This finding was assigned a cross-cutting aspect in the area of problem identification and resolution because the licensee failed to identify a performance issue completely

and accurately. Inspection Report# : 2011003 (pdf) Occupational Radiation Safety Public Radiation Safety Physical Protection Although the NRC is actively overseeing the Security cornerstone, the Commission has decided that certain findings pertaining to security cornerstone will not be publicly available to ensure that potentially useful information is not provided to a possible adversary. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : May 29, 2012

Palo Verde 3 2Q/2012 Plant Inspection Findings Initiating Events Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Obtain NRC Approval for a Change Adverse to Safe Shutdown The inspectors identified a Severity Level IV non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3, respectively, for the licensees failure to maintain the reactor coolant pumps in compliance with fire protection requirements. Specifically, the licensee failed to evaluate changes to a maintenance procedure that resulted in the addition of oil in excess of the capacity of the oil collection system, which was a condition adverse to fire protection. The failure to perform a fire protection program impact evaluation of changes to a maintenance procedure to add oil to the reactor coolant pumps was a performance deficiency. The performance deficiency is more than minor and therefore a finding, because it adversely affected the external factors attribute of the Initiating Events Cornerstone and its objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process, the condition represented a low degradation of the fire protection program element of fire prevention through control of combustible materials because of the over flow of oil spilling out of the reservoir. However, the problem impacted the NRCs ability to perform its oversight function and was assessed using the traditional enforcement process. In accordance with Section 6.1.d.2 of the NRC Enforcement Policy, dated July 12, 2011, this violation is categorized as Severity Level IV because the resulting changes were evaluated by the Significance Determination Process as having very low safety significance (Green). Inspection Report# : 2012002 (pdf) Significance: Dec 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Perform Testing for the Gaseous Radwaste System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, for the failure of the licensee to assure that all required testing for the gaseous radwaste (GR) system was identified and performed in accordance with written test procedures which incorporated the requirements and acceptance limits contained in applicable design documentation. Specifically, from May 1995 to October 26, 2011, the licensee did not identify nor perform functional testing on GR system equipment which is credited in the Updated Final Safety Analysis Report (UFSAR) to preclude the internal hydrogen explosion event. The licensee developed written test procedures and successfully completed appropriate functional tests on all three units as a corrective action to restore compliance. The licensee documented their corrective actions for this issue in Palo Verde Action Requests 3440072, 3931118, and 4004489. The licensees failure to perform functional testing on GR system equipment was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it is associated with the Initiating Events Cornerstone attribute of procedure quality in the area of testing procedure adequacy and it adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Specifically, the lack of having functional testing on GR system components could result in a credible hydrogen explosion event which could initiate a radiological release. Using Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process, the finding was determined to have very low safety significance (Green) because the condition represented a low degradation rating due to the fact that nitrogen dilution valves and compressor auto trip features all passed recent functional testing successfully. This

finding has no cross-cutting aspect assigned because the finding is not reflective of current performance. Inspection Report# : 2011005 (pdf) Mitigating Systems Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Hot Work Permit Procedure The inspectors identified a Green non-cited violation of technical specification 5.4.1.d for the failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit. Specifically, the licensee failed to implement all requirements of the hot work permit and let welding slag impinge on combustible materials in containment. The licensee stopped work and corrected the issue after being informed by the inspectors. This finding has been entered into the licensees corrective action program as Condition Report Disposition Request 4120969. The failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit, was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it affected the protection against external events attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and concluded the finding needed additional screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process. The inspectors determined that the condition represented a high degradation of the fire prevention and administrative controls fire protection program element due to the failure to observe all areas of vulnerability to a fire from hot work operation. The finding was determined only to affect the ability to maintain cold shutdown and using Figure F.1, the finding was determined to be of very low safety significance (Green). The inspectors determined this finding has a cross-cutting aspect in the area human performance associated with the work practices component because the licensee failed to communicate human error prevention techniques, such as self and peer checking [H.4(a)] (Section 1R05). Inspection Report# : 2012003 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Boric Acid Evaluation The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01 Boric Acid Walkdown Leak Detection, to provide an evaluation of an active boric acid leak prior to the end of the outage. Specifically, a boric acid leak from the packing of the charging backpressure header control valve did not receive an evaluation prior to the end of the outage when it was left in service as an active leak and corrective actions were deferred. The licensee performed the boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing were sufficient to support the functionality of the valve. The licensee will repair the valve at the soonest available opportunity and prior to restart after any maintenance or refueling outage. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 4191552. The failure of engineering personnel to provide an evaluation of an active boric acid leak prior to the end of the outage is a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and screened the finding using 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety significance (Green) because the finding

is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to take appropriate corrective action in a timely manner for boric acid evaluations of active leaks [P.1(d)] (Section 1R20). Inspection Report# : 2012003 (pdf) Significance: N/A Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Complete and Accurate Information Regarding Safety Related Roof Drainage Capabilities The inspectors identified a Severity Level IV violation of 10 CFR 50.9, Completeness and Accuracy of Information, for the failure of the licensee to provide complete and accurate information in all material respects in response to Generic Letter 88-20, Supplement 4. Specifically, the licensee asserted that roofs are equipped with roof drains and scuppers as backup. As a result, the licensee concluded roof ponding considerations were not applicable to the Palo Verde Nuclear Generating Station site. Inspectors determined that there are no roof drains installed. The licensee initiated corrective actions to provide an accurate depiction of the roof drainage capabilities to the NRC. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 3952605. The failure of the licensee to provide complete and accurate information for safety related building roof drainage was a performance deficiency. The Significance Determination Process is not suited to assess the significance of the performance deficiency because it affected the ability of the NRC to perform its regulatory oversight function and as such, it was assessed using traditional enforcement. This issue was determined to be a Severity Level IV violation in accordance with NRC Enforcement Policy examples provided in Section 6.9. No crosscutting aspect was assigned because the performance deficiency was assessed using traditional enforcement. Inspection Report# : 2012003 (pdf) Significance: Mar 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality Associated with Essential Chilled Water System Gas Accumulation The inspectors reviewed a self-revealing non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units. Specifically, more frequent biocide additions to the essential chilled water systems resulted in significant bacterial off gassing and voiding in the systems in all three units. The licensee entered the issue into the corrective action program as Condition Report Disposition Request 3850945, initiated corrective actions to vent the systems and monitor for gas accumulation, and is evaluating further corrective actions for the issue. The inspectors determined the failure of the licensee to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding: (1) is not a design or qualification issue; (2) did not represent an actual loss of safety function of the system or train; (3) did not result in the loss of one or more trains of non-technical specification equipment; and (4) did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to trend and assess information from the corrective action program and other assessments to identify this common cause problem [P.1(b)]. Inspection Report# : 2012002 (pdf)

Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Functionality Assessment for Safety-Related Buildings The inspectors identified a non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide a technical justification for continued operation of a degraded structure, system, or component. Specifically, after identifying a potential for insufficient drainage for safety related building roofs, plant personnel failed to perform a functional assessment and failed to assess the non-conforming condition to the current licensing basis. The licensee performed the functional assessment and later revised the assessment after the inspectors challenged assumptions used in the assessment. The licensee entered the issue into the corrective action program as Palo Verde Action Requests 3958463 and 3952605. The failure of the operations and engineering personnel to evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of decision making because the licensee failed to use conservative assumptions in decision making and adopts a requirement to demonstrate that the proposed action is safe in order to proceed rather than a requirement to demonstrate that it is unsafe in order to disapprove the action [H.1(b)]. Inspection Report# : 2012002 (pdf) Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Into Drawings and Calculations for Safety-related Roof Drainage Capability The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure of the licensee to translate the safety-related roof drainage capability design basis into drawings and calculations. Specifically, inspectors determined that there were no roof drains installed, although the plant was designed to have roof drains as the primary means for removing water from safety-related building roofs, and the licensee could not provide any design documentation to support adequacy of the roof drainage capacity without roof drains. The licensee performed an engineering evaluation to support the structural integrity of the safety-related buildings in the event of a design basis probable maximum precipitation event and is evaluating further corrective action. The licensee entered the issue into the corrective action program as PVARs 3958463 and 3952605. The inspectors concluded that the failure of the licensee to translate design basis information into drawings for safety-related building roof drainage was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the performance deficiency under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. No cross-cutting aspect was assigned because the performance deficiency was not indicative of current performance. Inspection Report# : 2012002 (pdf) Significance: Aug 18, 2011 Identified By: NRC

Item Type: NCV NonCited Violation Inadequate Operability Determination for Essential Chilled Water System Gas Voids The inspectors identified a noncited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures and complete a prompt operability determination for the essential chilled water system commensurate with system safety significance. Specifically, after identifying gas voids in the essential chilled water system in Unit 2, and subsequently Units 1 and 3, plant personnel failed to meet timeliness and quality requirements for a prompt operability determination of the essential chilled water systems. The licensee developed an Operational Decision Making Issue Plan and has maintained gas volumes below established limits. The licensee entered the issue into the corrective action program as PVAR 3886168 and has not completed all corrective actions. The inspectors concluded that the failure of the operations and engineering personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding: (1) is not a design or qualification issue; (2) did not represent an actual loss of safety function of the system or train; (3) did not result in the loss of one or more trains of non-technical specification equipment; and (4) did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the component of decision making because the licensee failed to make safety-significant or risk-significant decisions using a systematic process, especially when faced with uncertain or unexpected plant conditions, to ensure safety is maintained. Inspection Report# : 2011004 (pdf) Significance: Jul 27, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct and Prevent Recurrence of a Significant Condition Adverse to Quality Associated with the Emergency Diesel Generator Fuel Oil Transfer Pumps The inspectors identified a noncited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality associated with Unit 3 essential chiller A oil level. The condition adverse to quality involved inadequacies in plant operating procedures used to operate the chiller at low load conditions. As a result, the chiller was declared inoperable six times between July 27, 2011 and September 5, 2011 due to low oil level caused by oil migration into the refrigerant, a known phenomenon that occurs during low load conditions. The licensee implemented a temporary procedure change to ensure sufficient load is placed on the essential chiller during operation. The licensee entered the issue into the corrective action program as PVAR 3892184 and has not completed all corrective actions for the issue. The failure to promptly identify and correct a condition adverse to quality associated with operation of essential chillers was a performance deficiency. The performance deficiency is more than minor and is therefore a finding because it is associated with the equipment performance attribute of the Mitigating Systems Cornerstone and affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Using Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, the inspectors concluded the finding was of very low safety significance (Green) because the finding: (1) is not a design or qualification issue; (2) did not represent an actual loss of safety function of the system or train; (3) did not result in the loss of one or more trains of non-technical specification equipment; and (4) did not screen as potentially risk significant due to a seismic, flooding, or severe weather imitating event. The finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to take timely corrective actions after identifying inadequacies in the operating procedure during review of similar issues that occurred in Unit 2. Inspection Report# : 2011004 (pdf)

Barrier Integrity Emergency Preparedness Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure in the Choice of Protective Actions Consistent with Federal Guidance The inspectors identified a non-cited violation of 10 CFR 50.47(b)(10) for the licensees failure to develop and have in-place guidelines for the choice of protective actions during an emergency that were consistent with federal guidance. Specifically, the licensees procedure EP-0905, Protective Actions, Revision 2, did not implement the guidance of EPA-400-R-92-001, Manual of Protective Action Guides and Protective Actions for Nuclear Incidents, which states, in part, that evacuation is rarely justified when the projected dose does not exceed 1 rem (Total Effective Dose Equivalent). This issue is documented in the licensees corrective action program as Condition Report Disposition Request-3403829. The licensees automatic process that extended protective action during plant conditions and changes in wind direction without considering radiation dose was identified as a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it adversely affects the Emergency Preparedness Cornerstone objective of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency, and is associated with the cornerstone attributes of emergency response organization performance and procedure quality. This finding was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was associated with risk significant planning standard 10 CFR 50.47(b)(10), and was not a risk significant planning standard functional failure or a planning standard degraded function. The finding was not a functional failure or degraded planning standard function because appropriate protective action recommendations for the public would have been made for all areas where protective action guides were exceeded. The finding is related to the corrective action program component of the problem identification and resolution cross-cutting area because the licensee failed take appropriate corrective actions to address the safety issue in a timely manner. Inspection Report# : 2012002 (pdf) Occupational Radiation Safety Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures and Radiation Exposure Permit Requirements The inspectors reviewed a self-revealing non-cited violation of Technical Specification 5.4.1, because workers failed to follow radiation exposure permit requirements and entered high radiation area without authorization by entering the wrong room. As corrective action, the licensee coached the workers, restricted their access to the radiologically controlled area, and entered the issue into the corrective action program as CRDR 3988625. The failure to follow radiation exposure permit requirements is a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety Cornerstone attribute (exposure control) of program and process and affected the cornerstone objective, in that entering an area outside the scope of the radiation exposure permit and not knowing the associated dose rates in the high radiation area had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the

inspectors determined the finding had a very low safety significance because: (1) it was not associated with ALARA planning or work controls, (2) there was no overexposure, (3) there was no substantial potential for an overexposure, and (4) the ability to assess dose was not compromised. The finding had a human performance cross-cutting aspect associated with work practices because the individuals did not use peer or self-checking before entering the unauthorized high radiation area [H.4(a)]. Inspection Report# : 2012003 (pdf) Public Radiation Safety Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Verify a Transferee was Licensed to Receive Byproduct Material The inspector identified a noncited violation of 10 CFR 30.41 because the licensee failed to verify a transferee was authorized to receive byproduct material before transferring it. The failure to verify a transferee is licensed to receive the type, form, and quantity of byproduct being transferred is a performance deficiency. The significance was more than minor because radioactive material was actually transferred to an entity which was not licensed to receive the material. Thus, the performance deficiency was associated with the cornerstone attribute of Program & Process and adversely affected the associated cornerstone objective because the release of radioactive material to unlicensed entities could cause unplanned radiation dose or environmental contamination. Using Inspection Manual Chapter 0609, Appendix C, Public Radiation Safety Significance Determination Process, December 12, 2008, page D 13, the inspectors determined the violation had very low safety significance because the violation involved a radioactive material control issue, was not a transportation issue, and did not result in a dose to public of greater than 0.005 rem. This finding had a crosscutting aspect in the human performance area, work practices component, because personnel did not follow procedures. [H.4(b)] Inspection Report# : 2012003 (pdf) Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Request an Experience Waiver for a Reactor Operator License Applicant An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for failure to request an experience waiver on NRC Form 398 for a Reactor Operator license applicant who did not have three years of responsible nuclear power plant experience as required by NUREG 1021, Revision 9, Supplement 1, ES-202.D.1.a.(1). Upon discovery, the facility licensee submitted a revised NRC Form 398, which included the

waiver request, and entered this issue into their corrective action program as Condition Report 4080143. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency had the potential for impacting the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . Because the performance deficiency was corrected before the issuance of a license and an experience waiver was ultimately granted, it did not cause the NRC to make an incorrect regulatory decision. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inaccurate Identification of an Open-Reference Initial Licensing Exam Question as Closed-Reference An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for submitting a final written exam question to the NRC which was identified and approved as Closed Reference, but administered by the licensee as Open Reference by supplying the applicants with an unapproved Technical Specification. On evaluation, the NRC determined that it would not have approved the question had it been properly identified as open-reference on submittal, because the reference made the question a direct lookup and the information in the reference was of a nature that licensed operators are expected to have memorized. No licensing decisions were affected and the facility licensee entered this issue into their corrective action program as Condition Report 4144197. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency impacted the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . The performance deficiency did not cause the NRC to make an incorrect regulatory decision because it did not affect the number of applicants who passed. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Last modified : September 12, 2012

3Q/2012 Inspection Findings - Palo Verde 3 Palo Verde 3 3Q/2012 Plant Inspection Findings Initiating Events Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Obtain NRC Approval for a Change Adverse to Safe Shutdown The inspectors identified a Severity Level IV non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3, respectively, for the licensees failure to maintain the reactor coolant pumps in compliance with fire protection requirements. Specifically, the licensee failed to evaluate changes to a maintenance procedure that resulted in the addition of oil in excess of the capacity of the oil collection system, which was a condition adverse to fire protection. The failure to perform a fire protection program impact evaluation of changes to a maintenance procedure to add oil to the reactor coolant pumps was a performance deficiency. The performance deficiency is more than minor and therefore a finding, because it adversely affected the external factors attribute of the Initiating Events Cornerstone and its objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process, the condition represented a low degradation of the fire protection program element of fire prevention through control of combustible materials because of the over flow of oil spilling out of the reservoir. However, the problem impacted the NRCs ability to perform its oversight function and was assessed using the traditional enforcement process. In accordance with Section 6.1.d.2 of the NRC Enforcement Policy, dated July 12, 2011, this violation is categorized as Severity Level IV because the resulting changes were evaluated by the Significance Determination Process as having very low safety significance (Green). Inspection Report# : 2012002 (pdf) Significance: Dec 31, 2011 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Perform Testing for the Gaseous Radwaste System The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, for the failure of the licensee to assure that all required testing for the gaseous radwaste (GR) system was identified and performed in accordance with written test procedures which incorporated the requirements and acceptance limits contained in applicable design documentation. Specifically, from May 1995 to October 26, 2011, the licensee did not identify nor perform functional testing on GR system equipment which is credited in the Updated Final Safety Analysis Report (UFSAR) to preclude the internal hydrogen explosion event. The licensee developed written test procedures and successfully completed appropriate functional tests on all three units as a corrective action to restore compliance. The licensee documented their corrective actions for this issue in Palo Verde Action Requests 3440072, 3931118, and 4004489. The licensees failure to perform functional testing on GR system equipment was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it is associated with the Initiating Events Cornerstone attribute of procedure quality in the area of testing procedure adequacy and it adversely affected the Page 1 of 8

3Q/2012 Inspection Findings - Palo Verde 3 cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during power operations. Specifically, the lack of having functional testing on GR system components could result in a credible hydrogen explosion event which could initiate a radiological release. Using Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process, the finding was determined to have very low safety significance (Green) because the condition represented a low degradation rating due to the fact that nitrogen dilution valves and compressor auto trip features all passed recent functional testing successfully. This finding has no cross-cutting aspect assigned because the finding is not reflective of current performance. Inspection Report# : 2011005 (pdf) Mitigating Systems Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Hot Work Permit Procedure The inspectors identified a Green non-cited violation of technical specification 5.4.1.d for the failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit. Specifically, the licensee failed to implement all requirements of the hot work permit and let welding slag impinge on combustible materials in containment. The licensee stopped work and corrected the issue after being informed by the inspectors. This finding has been entered into the licensees corrective action program as Condition Report Disposition Request 4120969. The failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit, was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it affected the protection against external events attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and concluded the finding needed additional screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process. The inspectors determined that the condition represented a high degradation of the fire prevention and administrative controls fire protection program element due to the failure to observe all areas of vulnerability to a fire from hot work operation. The finding was determined only to affect the ability to maintain cold shutdown and using Figure F.1, the finding was determined to be of very low safety significance (Green). The inspectors determined this finding has a cross-cutting aspect in the area human performance associated with the work practices component because the licensee failed to communicate human error prevention techniques, such as self and peer checking [H.4(a)] (Section 1R05). Inspection Report# : 2012003 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Boric Acid Evaluation The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01 Boric Acid Walkdown Leak Detection, to provide an evaluation of an active boric acid leak prior to the end of the outage. Specifically, a boric acid leak from the packing of the charging backpressure header control valve did not receive an evaluation prior to the end of the outage when it was left in service as an active leak and corrective actions were deferred. The licensee performed the boric acid leakage evaluation and determined that monitoring coupled with Page 2 of 8

3Q/2012 Inspection Findings - Palo Verde 3 mitigating actions of cleaning and greasing were sufficient to support the functionality of the valve. The licensee will repair the valve at the soonest available opportunity and prior to restart after any maintenance or refueling outage. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 4191552. The failure of engineering personnel to provide an evaluation of an active boric acid leak prior to the end of the outage is a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and screened the finding using 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to take appropriate corrective action in a timely manner for boric acid evaluations of active leaks [P.1(d)] (Section 1R20). Inspection Report# : 2012003 (pdf) Significance: N/A Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Complete and Accurate Information Regarding Safety Related Roof Drainage Capabilities The inspectors identified a Severity Level IV violation of 10 CFR 50.9, Completeness and Accuracy of Information, for the failure of the licensee to provide complete and accurate information in all material respects in response to Generic Letter 88-20, Supplement 4. Specifically, the licensee asserted that roofs are equipped with roof drains and scuppers as backup. As a result, the licensee concluded roof ponding considerations were not applicable to the Palo Verde Nuclear Generating Station site. Inspectors determined that there are no roof drains installed. The licensee initiated corrective actions to provide an accurate depiction of the roof drainage capabilities to the NRC. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 3952605. The failure of the licensee to provide complete and accurate information for safety related building roof drainage was a performance deficiency. The Significance Determination Process is not suited to assess the significance of the performance deficiency because it affected the ability of the NRC to perform its regulatory oversight function and as such, it was assessed using traditional enforcement. This issue was determined to be a Severity Level IV violation in accordance with NRC Enforcement Policy examples provided in Section 6.9. No crosscutting aspect was assigned because the performance deficiency was assessed using traditional enforcement. Inspection Report# : 2012003 (pdf) Significance: Mar 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality Associated with Essential Chilled Water System Gas Accumulation The inspectors reviewed a self-revealing non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units. Specifically, more frequent biocide additions to the essential chilled water systems resulted in significant bacterial off gassing and voiding in the systems in all three units. The licensee entered the issue into the corrective action program as Condition Report Disposition Request 3850945, initiated corrective actions to vent the systems and monitor for gas accumulation, and is evaluating Page 3 of 8

3Q/2012 Inspection Findings - Palo Verde 3 further corrective actions for the issue. The inspectors determined the failure of the licensee to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding: (1) is not a design or qualification issue; (2) did not represent an actual loss of safety function of the system or train; (3) did not result in the loss of one or more trains of non-technical specification equipment; and (4) did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to trend and assess information from the corrective action program and other assessments to identify this common cause problem [P.1(b)]. Inspection Report# : 2012002 (pdf) Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Functionality Assessment for Safety-Related Buildings The inspectors identified a non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide a technical justification for continued operation of a degraded structure, system, or component. Specifically, after identifying a potential for insufficient drainage for safety related building roofs, plant personnel failed to perform a functional assessment and failed to assess the non-conforming condition to the current licensing basis. The licensee performed the functional assessment and later revised the assessment after the inspectors challenged assumptions used in the assessment. The licensee entered the issue into the corrective action program as Palo Verde Action Requests 3958463 and 3952605. The failure of the operations and engineering personnel to evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of decision making because the licensee failed to use conservative assumptions in decision making and adopts a requirement to demonstrate that the proposed action is safe in order to proceed rather than a requirement to demonstrate that it is unsafe in order to disapprove the action [H.1(b)]. Inspection Report# : 2012002 (pdf) Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Into Drawings and Calculations for Safety-related Roof Drainage Capability Page 4 of 8

3Q/2012 Inspection Findings - Palo Verde 3 The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure of the licensee to translate the safety-related roof drainage capability design basis into drawings and calculations. Specifically, inspectors determined that there were no roof drains installed, although the plant was designed to have roof drains as the primary means for removing water from safety-related building roofs, and the licensee could not provide any design documentation to support adequacy of the roof drainage capacity without roof drains. The licensee performed an engineering evaluation to support the structural integrity of the safety-related buildings in the event of a design basis probable maximum precipitation event and is evaluating further corrective action. The licensee entered the issue into the corrective action program as PVARs 3958463 and 3952605. The inspectors concluded that the failure of the licensee to translate design basis information into drawings for safety-related building roof drainage was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the performance deficiency under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. No cross-cutting aspect was assigned because the performance deficiency was not indicative of current performance. Inspection Report# : 2012002 (pdf) Barrier Integrity Emergency Preparedness Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure in the Choice of Protective Actions Consistent with Federal Guidance The inspectors identified a non-cited violation of 10 CFR 50.47(b)(10) for the licensees failure to develop and have in-place guidelines for the choice of protective actions during an emergency that were consistent with federal guidance. Specifically, the licensees procedure EP-0905, Protective Actions, Revision 2, did not implement the guidance of EPA-400-R-92-001, Manual of Protective Action Guides and Protective Actions for Nuclear Incidents, which states, in part, that evacuation is rarely justified when the projected dose does not exceed 1 rem (Total Effective Dose Equivalent). This issue is documented in the licensees corrective action program as Condition Report Disposition Request-3403829. The licensees automatic process that extended protective action during plant conditions and changes in wind direction without considering radiation dose was identified as a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it adversely affects the Emergency Preparedness Cornerstone objective of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency, and is associated with the cornerstone attributes of emergency response organization performance and procedure quality. This finding was determined to be of very low safety significance (Green) because it was a failure to comply with NRC requirements, was associated with risk significant planning standard 10 CFR 50.47(b)(10), and was not a risk significant planning standard functional failure or a planning standard degraded function. The finding was not a functional failure or degraded planning standard function because appropriate Page 5 of 8

3Q/2012 Inspection Findings - Palo Verde 3 protective action recommendations for the public would have been made for all areas where protective action guides were exceeded. The finding is related to the corrective action program component of the problem identification and resolution cross-cutting area because the licensee failed take appropriate corrective actions to address the safety issue in a timely manner. Inspection Report# : 2012002 (pdf) Occupational Radiation Safety Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Procedures and Radiation Exposure Permit Requirements The inspectors reviewed a self-revealing non-cited violation of Technical Specification 5.4.1, because workers failed to follow radiation exposure permit requirements and entered high radiation area without authorization by entering the wrong room. As corrective action, the licensee coached the workers, restricted their access to the radiologically controlled area, and entered the issue into the corrective action program as CRDR 3988625. The failure to follow radiation exposure permit requirements is a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety Cornerstone attribute (exposure control) of program and process and affected the cornerstone objective, in that entering an area outside the scope of the radiation exposure permit and not knowing the associated dose rates in the high radiation area had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding had a very low safety significance because: (1) it was not associated with ALARA planning or work controls, (2) there was no overexposure, (3) there was no substantial potential for an overexposure, and (4) the ability to assess dose was not compromised. The finding had a human performance cross-cutting aspect associated with work practices because the individuals did not use peer or self-checking before entering the unauthorized high radiation area [H.4(a)]. Inspection Report# : 2012003 (pdf) Public Radiation Safety Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Verify a Transferee was Licensed to Receive Byproduct Material The inspector identified a noncited violation of 10 CFR 30.41 because the licensee failed to verify a transferee was authorized to receive byproduct material before transferring it. The failure to verify a transferee is licensed to receive the type, form, and quantity of byproduct being transferred is a performance deficiency. The significance was more than minor because radioactive material was actually transferred to an entity which was not licensed to receive the material. Thus, the performance deficiency was associated with the cornerstone attribute of Program & Process and adversely affected the associated cornerstone objective because the release of radioactive material to unlicensed entities could cause unplanned radiation dose or environmental contamination. Using Inspection Manual Chapter 0609, Appendix C, Public Radiation Safety Significance Page 6 of 8

3Q/2012 Inspection Findings - Palo Verde 3 Determination Process, December 12, 2008, page D 13, the inspectors determined the violation had very low safety significance because the violation involved a radioactive material control issue, was not a transportation issue, and did not result in a dose to public of greater than 0.005 rem. This finding had a crosscutting aspect in the human performance area, work practices component, because personnel did not follow procedures. [H.4(b)] Inspection Report# : 2012003 (pdf) Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Request an Experience Waiver for a Reactor Operator License Applicant An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for failure to request an experience waiver on NRC Form 398 for a Reactor Operator license applicant who did not have three years of responsible nuclear power plant experience as required by NUREG 1021, Revision 9, Supplement 1, ES-202.D.1.a.(1). Upon discovery, the facility licensee submitted a revised NRC Form 398, which included the waiver request, and entered this issue into their corrective action program as Condition Report 4080143. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency had the potential for impacting the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . Because the performance deficiency was corrected before the issuance of a license and an experience waiver was ultimately granted, it did not cause the NRC to make an incorrect regulatory decision. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inaccurate Identification of an Open-Reference Initial Licensing Exam Question as Closed-Reference An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for submitting a final written exam question to the NRC which was identified and approved as Closed Reference, Page 7 of 8

3Q/2012 Inspection Findings - Palo Verde 3 but administered by the licensee as Open Reference by supplying the applicants with an unapproved Technical Specification. On evaluation, the NRC determined that it would not have approved the question had it been properly identified as open-reference on submittal, because the reference made the question a direct lookup and the information in the reference was of a nature that licensed operators are expected to have memorized. No licensing decisions were affected and the facility licensee entered this issue into their corrective action program as Condition Report 4144197. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency impacted the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . The performance deficiency did not cause the NRC to make an incorrect regulatory decision because it did not affect the number of applicants who passed. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Last modified : November 30, 2012 Page 8 of 8

4Q/2012 Inspection Findings - Palo Verde 3 Palo Verde 3 4Q/2012 Plant Inspection Findings Initiating Events Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Obtain NRC Approval for a Change Adverse to Safe Shutdown The inspectors identified a Severity Level IV non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3, respectively, for the licensees failure to maintain the reactor coolant pumps in compliance with fire protection requirements. Specifically, the licensee failed to evaluate changes to a maintenance procedure that resulted in the addition of oil in excess of the capacity of the oil collection system, which was a condition adverse to fire protection. The licensee has removed the excess oil from Unit 3 reactor coolant pumps and is evaluating further corrective actions for the issue. The licensee entered this issue into the licensees corrective action program as PVAR 3305719. The failure to perform a fire protection program impact evaluation of changes to a maintenance procedure to add oil to the reactor coolant pumps was a performance deficiency. The performance deficiency is more than minor and therefore a finding, because it adversely affected the external factors attribute of the Initiating Events Cornerstone and its objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process, the condition represented a low degradation of the fire protection program element of fire prevention through control of combustible materials because of the over flow of oil spilling out of the reservoir. However, the problem impacted the NRCs ability to perform its oversight function and was assessed using the traditional enforcement process. In accordance with Section 6.1.d.2 of the NRC Enforcement Policy, dated July 12, 2011, this violation is categorized as Severity Level IV because the resulting changes were evaluated by the Significance Determination Process as having very low safety significance. Inspection Report# : 2012002 (pdf) Mitigating Systems Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct a Condition Adverse to Fire Protection The inspectors identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3 for the licensees failure to identify and correct a condition adverse to fire protection. Specifically, on November 19, 2012, inspectors questioned operations personnel and identified that operators did not know the locations of sound powered telephone equipment, were unfamiliar with their use, and unfamiliar with procedural guidance for their use. This is a communications device used for post-fire safe shutdown credited in the fire protection program and emergency plan. The lack of familiarity with location and use of these communication devices would have adversely affected operations personnel response to an emergency. The licensee completed a self-assessment of emergency preparedness communication on October 31, 2012, and did not identify these weaknesses. The licensee immediately issued a night order and informed operations personnel of the location of the sound powered phones and procedural guidance. The licensee entered this issue into the licensees corrective action program as Palo Verde Action Request 4294407. Page 1 of 12

4Q/2012 Inspection Findings - Palo Verde 3 The failure to identify and correct a condition adverse to fire protection was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the human performance attribute of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process. The finding was determined to be a low degradation of the post-fire safe shutdown program element and screens to Green using Step 1.3.1. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the self and independent assessments component because the licensee failed to conduct a self-assessment of sufficient depth, that was comprehensive and self-critical, which failed to recognize that operator knowledge was lacking for the use of some communication device [P.3(a)]. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Licesned Operator Examination Integrity The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent administration of the examination. The licensee entered the finding into the corrective action program as Action Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)] Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct Scupper Obstruction The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a condition adverse to quality. Specifically, on November 7, 2011, after the inspectors notified the licensee about scupper obstruction on safety related building roofs, the licensee failed to enter this issue into the corrective action program and take appropriate corrective actions to remove the Page 2 of 12

4Q/2012 Inspection Findings - Palo Verde 3 obstructions. The licensee rediscovered this condition during post Fukushima walkdowns in response to a Request for Information pursuant to 10 CRF 50.54(f), removed the obstructions and established walkdowns to ensure the scuppers remained unobstructed. The licensee has entered the issue into the corrective action program as PVAR 4255561. The inspectors concluded that the failure of the licensee to correct a condition adverse to quality was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the protection against external events of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initialing events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety-significance (Green) because the finding did not result in the complete loss of a safety function due to an external event. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to have a low threshold for entering issues into the corrective action program [P.1(a)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Boric Acid Evaluation The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, to provide an adequate evaluation of an active boric acid leak. Specifically, an evaluation of a boric acid leak from the packing of the charging backpressure header control valve did not assess all consequences of continued operation. The licensee performed a subsequent boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing all susceptible components was sufficient to support the functionality of the valve. The licensee will repair the valve at the soonest available opportunity; prior to restart after any maintenance or refueling outage. The inspectors concluded that the failure of the engineering personnel to provide an adequate evaluation of an active boric acid leak was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and using Inspection Manual Chapter 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety-significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to make conservative assumptions and allowed corrosion of carbon steel components without an appropriate understanding of their function or unintended consequences [H.1(b)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Determination for ARD Relay Failures The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After a ventilation damper failed to close during a functional stroke test, plant personnel did not consider previous operability determinations and failed to provide supporting analysis to confirm there was no reduction in reliability of Page 3 of 12

4Q/2012 Inspection Findings - Palo Verde 3 ARD relays. This issue is captured in the corrective action program as PVAR 4255816. The licensee has successfully cycled all ARD relays which could be performed during at-power operations, scheduled testing for remaining relays, and initiated a design change document that will determine a permanent substitute for the ARD660UR DC relays. The failure of the operations and engineering personnel to follow Procedure 40DP-9OP26 to evaluate the operability of a structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded that the finding was of very low safety-significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the results of the apparent cause evaluation for the first three ARD relay failures to the appropriate operations personnel [H.1(c)]. Inspection Report# : 2012004 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Hot Work Permit Procedure The inspectors identified a non-cited violation of technical specification 5.4.1.d for the failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit. Specifically, the licensee failed to implement all requirements of the hot work permit and let welding slag impinge on combustible materials in containment. The licensee stopped work and corrected the issue after being informed by the inspectors. This finding has been entered into the licensees corrective action program as Condition Report Disposition Request 4120969. The failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit, was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it affected the protection against external events attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and concluded the finding needed additional screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process. The inspectors determined that the condition represented a high degradation of the fire prevention and administrative controls fire protection program element due to the failure to observe all areas of vulnerability to a fire from hot work operation. The finding was determined only to affect the ability to maintain cold shutdown and using Figure F.1, the finding was determined to be of very low safety significance (Green). The inspectors determined this finding has a cross-cutting aspect in the area human performance associated with the work practices component because the licensee failed to communicate human error prevention techniques, such as self and peer checking [H.4(a)]. Inspection Report# : 2012003 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Boric Acid Evaluation The inspectors identified a non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01 Boric Acid Walkdown Leak Detection, to provide an evaluation of an active boric acid leak prior to the end of the outage. Specifically, a boric acid leak from the packing of the charging backpressure header control valve did not receive an evaluation prior Page 4 of 12

4Q/2012 Inspection Findings - Palo Verde 3 to the end of the outage when it was left in service as an active leak and corrective actions were deferred. The licensee performed the boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing were sufficient to support the functionality of the valve. The licensee plans to repair the valve at the soonest available opportunity and prior to restart after any maintenance or refueling outage. This finding has been entered into the licensees corrective action program as PVAR 4191552. The failure of engineering personnel to provide an evaluation of an active boric acid leak prior to the end of the outage is a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and screened the finding using 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance with the decision making component because the licensee failed to make decisions using a systematic process when faced with unexpected circumstances because decisions associated with boric acid corrosion mitigation and management were made outside of the boric acid corrosion control program [H.1.(a)]. Inspection Report# : 2012003 (pdf) Significance: ??? Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Complete and Accurate Information Regarding Safety Related Roof Drainage Capabilities The inspectors identified a Severity Level IV violation of 10 CFR 50.9, Completeness and Accuracy of Information, for the failure of the licensee to provide complete and accurate information in all material respects in response to Generic Letter 88-20, Supplement 4. Specifically, the licensee asserted that roofs are equipped with roof drains and scuppers as backup. As a result, the licensee concluded roof ponding considerations were not applicable to the Palo Verde Nuclear Generating Station site. Inspectors determined that there are no roof drains installed. The licensee initiated corrective actions to provide an accurate depiction of the roof drainage capabilities to the NRC. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 3952605. The failure of the licensee to provide complete and accurate information for safety related building roof drainage was a performance deficiency. The Significance Determination Process is not suited to assess the significance of the performance deficiency because it affected the ability of the NRC to perform its regulatory oversight function and as such, it was assessed using traditional enforcement. This issue was determined to be a Severity Level IV violation in accordance with NRC Enforcement Policy examples provided in Section 6.9. No crosscutting aspect was assigned because the performance deficiency was assessed using traditional enforcement. Inspection Report# : 2012003 (pdf) Significance: Mar 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Promptly Identify and Correct a Condition Adverse to Quality Associated with Essential Chilled Water System Gas Accumulation The inspectors reviewed a self-revealing non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action, for the licensees failure to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units. Specifically, more frequent biocide additions to the essential chilled water systems resulted in significant bacterial off gassing and voiding in the systems in all three units. The licensee entered the issue into the corrective action program as Condition Report Disposition Request 3850945, initiated corrective actions to vent the systems and monitor for gas accumulation, and is evaluating further corrective actions for the issue. Page 5 of 12

4Q/2012 Inspection Findings - Palo Verde 3 The inspectors determined the failure of the licensee to promptly identify and correct a condition adverse to quality associated with essential chilled water system gas accumulation in all three units was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding: (1) is not a design or qualification issue; (2) did not represent an actual loss of safety function of the system or train; (3) did not result in the loss of one or more trains of non-technical specification equipment; and (4) did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to trend and assess information from the corrective action program and other assessments to identify this common cause problem [P.1(b)]. Inspection Report# : 2012002 (pdf) Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Functionality Assessment for Safety-Related Buildings The inspectors identified a non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide a technical justification for continued operation of a degraded structure, system, or component. Specifically, after identifying a potential for insufficient drainage for safety related building roofs, plant personnel failed to perform a functional assessment and failed to assess the non-conforming condition to the current licensing basis. The licensee performed the functional assessment and later revised the assessment after the inspectors challenged assumptions used in the assessment. The licensee entered the issue into the corrective action program as Palo Verde Action Requests 3958463 and 3952605. The failure of the operations and engineering personnel to evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of decision making because the licensee failed to use conservative assumptions in decision making and adopts a requirement to demonstrate that the proposed action is safe in order to proceed rather than a requirement to demonstrate that it is unsafe in order to disapprove the action [H.1(b)]. Inspection Report# : 2012002 (pdf) Significance: Mar 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Into Drawings and Calculations for Safety-related Roof Drainage Capability The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure of the licensee to translate the safety-related roof drainage capability design basis into drawings and calculations. Specifically, inspectors determined that there were no roof drains installed, although the plant was designed to have roof drains as the primary means for removing water from safety-related building roofs, and the licensee could not provide any design documentation to support adequacy of the roof drainage capacity without roof drains. The licensee performed an engineering evaluation to support the structural integrity of the safety-related Page 6 of 12

4Q/2012 Inspection Findings - Palo Verde 3 buildings in the event of a design basis probable maximum precipitation event and is evaluating further corrective action. The licensee entered the issue into the corrective action program as PVARs 3958463 and 3952605. The inspectors concluded that the failure of the licensee to translate design basis information into drawings for safety-related building roof drainage was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the performance deficiency under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Phase I - Initial Screening and Characterization of Findings, and concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. No cross-cutting aspect was assigned because the performance deficiency was not indicative of current performance. Inspection Report# : 2012002 (pdf) Barrier Integrity Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Pressure Testing of the Reactor Vessel Flange Leak-Off Lines Inspectors identified a non-cited violation of 10 CFR 50.55a(g)(4) involving the licensees failure to perform a system pressure test of the reactor vessel flange leak off-line of Units 1, 2, and 3 in accordance with the applicable edition of Section XI of the ASME Code. Contrary to the above, prior to October 10, 2012, the licensee failed to perform the required pressure test of the reactor vessel flange seal leak-off line for all three units. Specifically, the licensee failed to implement the ASME Code, Section XI, Class 2 requirements for pressure retaining components as provided by Article IWC-5220, System Leakage Test. The licensee entered the finding into their corrective action program as Palo Verde Action Request 4269674. The inspectors determined that the licensees failure to perform a pressure test of the reactor vessel flange leak-off line was a performance deficiency. The performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of systems, structures and components and barrier performance, and adversely affects the cornerstone objective to provide a reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Manual Chapter 0609, Attachment A, The Significant Determination Process (SDP) for Findings At-Power, the finding was determined to be of very low safety significance (Green) because the finding did not result in exceeding the reactor coolant system leak rate for a small loss-of-coolant accident, and did not affect other systems used to mitigate a loss-of-coolant accident resulting in a total loss of their function. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Tracking of a Functional Assessment for Spent Fuel Pool Heat Load The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent Page 7 of 12

4Q/2012 Inspection Findings - Palo Verde 3 administration of the examination. The licensee entered the finding into the corrective action program as Action Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)] Inspection Report# : 2012005 (pdf) Emergency Preparedness Significance: Dec 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Technical Support Center Diesel Generator Not Restored Following Maintenance A self revealing Green non-cited violation of 10 CFR 50.47(b)(8) was identified for the failure to maintain adequate facilities to support emergency response. Specifically, the licensee found the technical support center battery disconnect switch had not been restored following maintenance activities. This configuration would have rendered the diesel generator unable to start automatically as designed in the event of a loss of off-site power. The licensee initiated immediate corrective actions to restore the technical support center diesel generator to a functional configuration and has begun implementation of a more formal process for component configuration verification of critical technical support center equipment. The licensee has entered this issue into their corrective action program as Palo Verde Action Request 4165625. The failure to follow Procedure 40OP-9NG01 for performing a functional test of 480V switchgear following maintenance activities is a performance deficiency. This performance deficiency was more than minor because it is associated with the Emergency Preparedness Cornerstone attribute of facilities and equipment and it adversely affected the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green) because the degraded planning standard function did not result in the loss of technical support center functionality for longer than 7 days. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources. Specifically, the licensees work control procedures did not include critical technical support center systems to ensure that technical support center configuration control was maintained commensurate with its significance [H.2(c)] Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 50.54(q) Evaluation Page 8 of 12

4Q/2012 Inspection Findings - Palo Verde 3 Inspectors identified a Severity Level IV, non-cited violation of 10 CFR 50.54 (q), Conditions of licenses, and an associated Green finding for the licensees failure to perform an appropriate design scope change, which resulted in the reduction in effectiveness of the emergency plan. Specifically, on May 19, 2011, the licensee completed a modification to revise protective area lightning power sources and removed ground fault protections on a circuit breaker attached to the bus, which powers the technical support center. This change created a condition that would remove power to the technical support center and prevent emergency plan required back up power from being able to power the bus. On August 10, 2012, a lighting fault caused a complete loss of power to the technical support center, demonstrating that this change decreased the effectiveness of the emergency plan. On September 26, 2012, the licensee reactivated the ground fault protection for the circuit breaker and established compensatory measures to restore power to ensure technical support center staffing will not be challenged. The licensee entered this into their corrective action program as condition report disposition request 4230209. The failure to perform an appropriate design scope change was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the facilities and equipment attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green). Additionally, the violation of 10 CFR 50.54 (q) impacted the ability of the NRC to perform its regulatory oversight function and was dispositioned using traditional enforcement. This violation was determined to be a Severity Level IV violation per Section 6.6 of the NRC Enforcement Policy because the violation was not associated with licensees ability to meet or implement any regulatory requirement related to assessment or notification. Although the regulatory requirement could be implemented during the response to an actual emergency, the implementation would be degraded. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the work practices component because the licensee failed to ensure supervisory management and oversight of contractors such that nuclear safety is supported [H.4.(c)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Declare an Unusual Event The inspectors identified a Green non-cited violation of 10 CFR 50.54(q) for the failure of operations personnel to adequately implement the emergency plan. Specifically, on August 26, 2012, auxiliary operators felt vibratory ground motion inside the protected area at 12:31pm and again at 1:58pm. The United States Geological Survey (USGS) confirmed that two earthquakes, of magnitude 5.3 and 5.5 respectively, occurred at those times in the area of the plant. Plant operators did not declare an Unusual Event in accordance with the emergency plan. The licensee entered the issue into the corrective action program as PVAR 4255819 and initiated an apparent cause evaluation to identify the cause and corrective actions. The failure to implement the emergency plan and declare an Unusual Event was a performance deficiency. The performance deficiency was more than minor and therefore a finding, because it affected the Emergency Response Organization performance attribute of the Emergency Preparedness cornerstone and affected the cornerstone objective to ensure the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Using Manual Chapter 0609, Appendix B, "Emergency Preparedness Significance Determination Process," Attachment 1, the finding was determined to have very low safety - significance (Green) because the actual event implementation problem was associated with an Unusual Event. This finding has a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure training of personnel was adequate to assure proper implementation of the emergency plan [H.2.(b)]. Inspection Report# : 2012004 (pdf) Significance: Mar 31, 2012 Identified By: NRC Page 9 of 12

4Q/2012 Inspection Findings - Palo Verde 3 Item Type: NCV NonCited Violation Failure in the Choice of Protective Actions Consistent with Federal Guidance The inspectors identified a non-cited violation of 10 CFR 50.47(b)(10) for the licensees failure to develop and have in-place guidelines for the choice of protective actions during an emergency that were consistent with federal guidance. Specifically, the licensees procedure EP-0905, Protective Actions, Revision 2, did not implement the guidance of EPA-400-R-92-001, Manual of Protective Action Guides and Protective Actions for Nuclear Incidents, which states, in part, that evacuation is rarely justified when the projected dose does not exceed 1 rem (Total Effective Dose Equivalent). This issue is documented in the licensees corrective action program as Condition Report Disposition Request-3403829. The licensees automatic process that extended protective action during plant conditions and changes in wind direction without considering radiation dose was identified as a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it adversely affects the Emergency Preparedness Cornerstone objective of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency, and is associated with the cornerstone attributes of emergency response organization performance and procedure quality. This finding was determined to be of very low safety significance because it was a failure to comply with NRC requirements, was associated with risk significant planning standard 10 CFR 50.47(b) (10), and was not a risk significant planning standard functional failure or a planning standard degraded function. The finding was not a functional failure or degraded planning standard function because appropriate protective action recommendations for the public would have been made for all areas where protective action guides were exceeded. The finding is related to the corrective action program component of the problem identification and resolution cross-cutting area because the licensee failed take appropriate corrective actions to address the safety issue in a timely manner [P1.d]. Inspection Report# : 2012002 (pdf) Occupational Radiation Safety Significance: Jun 30, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Follow Procedures and Radiation Exposure Permit Requirements The inspectors reviewed a self-revealing non-cited violation of Technical Specification 5.4.1, because workers failed to follow radiation exposure permit requirements and entered high radiation area without authorization by entering the wrong room. As corrective action, the licensee coached the workers, restricted their access to the radiologically controlled area, and entered the issue into the corrective action program as CRDR 3988625. The failure to follow radiation exposure permit requirements is a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety Cornerstone attribute (exposure control) of program and process and affected the cornerstone objective, in that entering an area outside the scope of the radiation exposure permit and not knowing the associated dose rates in the high radiation area had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding had a very low safety significance because: (1) it was not associated with ALARA planning or work controls, (2) there was no overexposure, (3) there was no substantial potential for an overexposure, and (4) the ability to assess dose was not compromised. The finding had a human performance cross-cutting aspect associated with work practices because the individuals did not use peer or self-checking before entering the unauthorized high radiation area [H.4(a)]. Inspection Report# : 2012003 (pdf) Public Radiation Safety Page 10 of 12

4Q/2012 Inspection Findings - Palo Verde 3 Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Verify a Transferee was Licensed to Receive Byproduct Material The inspector identified a non-cited violation of 10 CFR 30.41 because the licensee failed to verify a transferee was authorized to receive byproduct material before transferring it. This finding was entered in the licensees corrective action program as CRDR 4136342. The failure to verify a transferee is licensed to receive the type, form, and quantity of byproduct being transferred is a performance deficiency. The significance was more than minor because radioactive material was actually transferred to an entity which was not licensed to receive the material. Thus, the performance deficiency was associated with the cornerstone attribute of Program & Process and adversely affected the associated cornerstone objective because the release of radioactive material to unlicensed entities could cause unplanned radiation dose or environmental contamination. Using Inspection Manual Chapter 0609, Appendix D, Public Radiation Safety Significance Determination Process, December 12, 2008, page D 13, the inspectors determined the violation had very low safety significance because the violation involved a radioactive material control issue, was not a transportation issue, and did not result in a dose to public of greater than 0.005 rem. This finding had a crosscutting aspect in the human performance area, work practices component, because personnel did not follow procedures [H.4(b)]. Inspection Report# : 2012003 (pdf) Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Request an Experience Waiver for a Reactor Operator License Applicant An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for failure to request an experience waiver on NRC Form 398 for a Reactor Operator license applicant who did not have three years of responsible nuclear power plant experience as required by NUREG 1021, Revision 9, Supplement 1, ES-202.D.1.a.(1). Upon discovery, the facility licensee submitted a revised NRC Form 398, which included the waiver request, and entered this issue into their corrective action program as Condition Report 4080143. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency had the potential for impacting the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . Because the performance deficiency was Page 11 of 12

4Q/2012 Inspection Findings - Palo Verde 3 corrected before the issuance of a license and an experience waiver was ultimately granted, it did not cause the NRC to make an incorrect regulatory decision. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inaccurate Identification of an Open-Reference Initial Licensing Exam Question as Closed-Reference An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for submitting a final written exam question to the NRC which was identified and approved as Closed Reference, but administered by the licensee as Open Reference by supplying the applicants with an unapproved Technical Specification. On evaluation, the NRC determined that it would not have approved the question had it been properly identified as open-reference on submittal, because the reference made the question a direct lookup and the information in the reference was of a nature that licensed operators are expected to have memorized. No licensing decisions were affected and the facility licensee entered this issue into their corrective action program as Condition Report 4144197. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency impacted the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . The performance deficiency did not cause the NRC to make an incorrect regulatory decision because it did not affect the number of applicants who passed. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Last modified : February 28, 2013 Page 12 of 12

1Q/2013 Inspection Findings - Palo Verde 3 Palo Verde 3 1Q/2013 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability The inspectors identified a Green NCV of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After one channel of initiation logic inadvertently tripped for the Unit 3 containment spray actuation signal portion of the engineered safety features actuation system, plant operators declared the channel inoperable and entered Technical Specification 3.3.6, Engineered Safety Features Actuation System Logic and Manual Trip, Condition B. Before troubleshooting began, operators evaluated the condition, declared the channel operable, and exited the technical specification condition. Plant personnel subsequently restored the channel after troubleshooting. The inspectors concluded that plant personnel did not consider all required functions and design requirements of the system and should not have declared the channel operable before completing troubleshooting and restoring the system to normal operation. This issue is captured in the corrective action program as Condition Report Disposition Request 4350321. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because, if left uncorrected, the performance deficiency had the potential to lead to a more significant safety concern. Specifically, a spurious signal or channel failure would have resulted in an inadvertent actuation of containment spray in Unit 3. The inspectors evaluated the significance of the issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process for Findings at-Power. Inspectors concluded that the finding was of very low safety significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of resources because the licensee failed to provide sufficient training to plant personnel to ensure all aspects of the current licensing basis and design requirements are considered when evaluating degraded and non-conforming conditions for operability [H.2(b)]. Inspection Report# : 2013002 (pdf) Significance: Mar 31, 2013 Page 1 of 13

1Q/2013 Inspection Findings - Palo Verde 3 Identified By: NRC Item Type: NCV NonCited Violation Multiple Failures to Identify Conditions Adverse to Quality The inspectors identified two examples of a Green NCV of 10 CFR Part 50, Appendix B, Criterion XVI Corrective Action, for the failure of the licensee to promptly identify and correct conditions adverse to quality. Specifically, on July 19, 2012, personnel failed to follow Procedure 01DP-0AP12, Palo Verde Action Request Processing, and enter into the corrective action process a failure to comply with technical specifications to enter limiting condition for operation 3.0.3 when maintenance activities rendered safety related inverters inoperable. In addition, on May 2, 2011, the licensee also failed to enter an unanalyzed diversion of emergency core cooling system flow into the corrective action process, despite procedural guidance to the contrary. The licensee entered the issues into the corrective action program as Palo Verde Action Request (PVAR) 4347283 and PVAR 4389514 and is assessing corrective actions. The inspectors concluded that the failure to promptly identify and correct conditions adverse to quality was a performance deficiency. The inspectors determined the performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and its objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors determined the two issues had similar causal factors and should be documented as one NCV in accordance with NRC enforcement guidance. The inspectors evaluated the significance of each issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations. For the issue associated with inoperable safety related inverters, the inspectors determined the finding to be of very low safety significance (Green) because all questions in Exhibit 2.A could be answered no. For the issue associated with an unanalyzed condition of the high pressure safety injection system, the inspectors determined that the finding represented a loss of system function and needed a detailed evaluation. The inspectors used the Palo Verde Standardized Plant Analysis Risk model, Revision 8.20, with a truncation limit of E-11 and performed a bounding significance determination and found the finding to be of very low safety significance (Green). The bounding change to the core damage frequency was 2.4E-9/year. The dominant core damage sequences included: medium break loss of coolant accident, system transient, and steam generator tube rupture. The very short exposure period minimized the significance. A Region IV senior reactor analyst reviewed the results and agreed with the conclustions. This finding has a cross-cutting aspect in the area of human performance associated with the decision making component because the licensee failed to use a systematic process for dealing uncertain conditions adverse to quality [H.1(a)]. Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct a Condition Adverse to Fire Protection The inspectors identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3 for the licensees failure to identify and correct a condition adverse to fire protection. Specifically, on November 19, 2012, inspectors questioned operations personnel and identified that operators did not know the locations of sound powered telephone equipment, were unfamiliar with their use, and unfamiliar with procedural guidance for their use. This is a communications device used for post-fire safe shutdown credited in the fire protection program and emergency plan. The lack of familiarity with location and use of these communication devices would have adversely affected operations personnel response to an emergency. The licensee completed a self-assessment of emergency preparedness communication on October 31, 2012, and did not identify these weaknesses. The licensee immediately issued a night order and informed operations personnel of the location of the sound powered phones and procedural guidance. The licensee entered this issue into the licensees corrective action program as Palo Verde Action Request 4294407. The failure to identify and correct a condition adverse to fire protection was a performance deficiency. The Page 2 of 13

1Q/2013 Inspection Findings - Palo Verde 3 performance deficiency was more than minor, and therefore a finding, because it adversely affected the human performance attribute of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process. The finding was determined to be a low degradation of the post-fire safe shutdown program element and screens to Green using Step 1.3.1. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the self and independent assessments component because the licensee failed to conduct a self-assessment of sufficient depth, that was comprehensive and self-critical, which failed to recognize that operator knowledge was lacking for the use of some communication device [P.3(a)]. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Licensed Operator Examination Integrity The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent administration of the examination. The licensee entered the finding into the corrective action program as Action Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)] Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct Scupper Obstruction Page 3 of 13

1Q/2013 Inspection Findings - Palo Verde 3 The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a condition adverse to quality. Specifically, on November 7, 2011, after the inspectors notified the licensee about scupper obstruction on safety related building roofs, the licensee failed to enter this issue into the corrective action program and take appropriate corrective actions to remove the obstructions. The licensee rediscovered this condition during post Fukushima walkdowns in response to a Request for Information pursuant to 10 CRF 50.54(f), removed the obstructions and established walkdowns to ensure the scuppers remained unobstructed. The licensee has entered the issue into the corrective action program as PVAR 4255561. The inspectors concluded that the failure of the licensee to correct a condition adverse to quality was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the protection against external events of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initialing events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety-significance (Green) because the finding did not result in the complete loss of a safety function due to an external event. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to have a low threshold for entering issues into the corrective action program [P.1(a)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Boric Acid Evaluation The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, to provide an adequate evaluation of an active boric acid leak. Specifically, an evaluation of a boric acid leak from the packing of the charging backpressure header control valve did not assess all consequences of continued operation. The licensee performed a subsequent boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing all susceptible components was sufficient to support the functionality of the valve. The licensee will repair the valve at the soonest available opportunity; prior to restart after any maintenance or refueling outage. The inspectors concluded that the failure of the engineering personnel to provide an adequate evaluation of an active boric acid leak was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and using Inspection Manual Chapter 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety-significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to make conservative assumptions and allowed corrosion of carbon steel components without an appropriate understanding of their function or unintended consequences [H.1(b)]. Inspection Report# : 2012004 (pdf) Page 4 of 13

1Q/2013 Inspection Findings - Palo Verde 3 Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Determination for ARD Relay Failures The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After a ventilation damper failed to close during a functional stroke test, plant personnel did not consider previous operability determinations and failed to provide supporting analysis to confirm there was no reduction in reliability of ARD relays. This issue is captured in the corrective action program as PVAR 4255816. The licensee has successfully cycled all ARD relays which could be performed during at-power operations, scheduled testing for remaining relays, and initiated a design change document that will determine a permanent substitute for the ARD660UR DC relays. The failure of the operations and engineering personnel to follow Procedure 40DP-9OP26 to evaluate the operability of a structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded that the finding was of very low safety-significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the results of the apparent cause evaluation for the first three ARD relay failures to the appropriate operations personnel [H.1(c)]. Inspection Report# : 2012004 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Hot Work Permit Procedure The inspectors identified a non-cited violation of technical specification 5.4.1.d for the failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit. Specifically, the licensee failed to implement all requirements of the hot work permit and let welding slag impinge on combustible materials in containment. The licensee stopped work and corrected the issue after being informed by the inspectors. This finding has been entered into the licensees corrective action program as Condition Report Disposition Request 4120969. The failure of the licensee to follow Procedure 14DP-0FP36, Hot Work Permit, was a performance deficiency. The performance deficiency is more than minor, and therefore a finding, because it affected the protection against external events attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and concluded the finding needed additional screening under IMC 0609, Appendix F, Fire Protection Significance Determination Process. The inspectors determined that the condition represented a high degradation of the fire prevention and administrative controls fire protection program element due to the failure to observe all areas of vulnerability to a fire from hot work operation. The finding was determined only to affect the ability to maintain cold shutdown and using Figure F.1, the finding was determined to be Page 5 of 13

1Q/2013 Inspection Findings - Palo Verde 3 of very low safety significance (Green). The inspectors determined this finding has a cross-cutting aspect in the area human performance associated with the work practices component because the licensee failed to communicate human error prevention techniques, such as self and peer checking [H.4(a)]. Inspection Report# : 2012003 (pdf) Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Boric Acid Evaluation The inspectors identified a non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01 Boric Acid Walkdown Leak Detection, to provide an evaluation of an active boric acid leak prior to the end of the outage. Specifically, a boric acid leak from the packing of the charging backpressure header control valve did not receive an evaluation prior to the end of the outage when it was left in service as an active leak and corrective actions were deferred. The licensee performed the boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing were sufficient to support the functionality of the valve. The licensee plans to repair the valve at the soonest available opportunity and prior to restart after any maintenance or refueling outage. This finding has been entered into the licensees corrective action program as PVAR 4191552. The failure of engineering personnel to provide an evaluation of an active boric acid leak prior to the end of the outage is a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and screened the finding using 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance with the decision making component because the licensee failed to make decisions using a systematic process when faced with unexpected circumstances because decisions associated with boric acid corrosion mitigation and management were made outside of the boric acid corrosion control program [H.1.(a)]. Inspection Report# : 2012003 (pdf) Significance: N/A Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Complete and Accurate Information Regarding Safety Related Roof Drainage Capabilities The inspectors identified a Severity Level IV violation of 10 CFR 50.9, Completeness and Accuracy of Information, for the failure of the licensee to provide complete and accurate information in all material respects in response to Generic Letter 88-20, Supplement 4. Specifically, the licensee asserted that roofs are equipped with roof drains and scuppers as backup. As a result, the licensee concluded roof ponding considerations were not applicable to the Palo Verde Nuclear Generating Station site. Inspectors determined that there are no roof drains installed. The licensee initiated corrective actions to provide an accurate depiction of the roof drainage capabilities to the NRC. This finding has been entered into the licensees corrective action program as Palo Verde Action Request 3952605. The failure of the licensee to provide complete and accurate information for safety related building roof drainage was a performance deficiency. The Significance Determination Process is not suited to assess the significance of the Page 6 of 13

1Q/2013 Inspection Findings - Palo Verde 3 performance deficiency because it affected the ability of the NRC to perform its regulatory oversight function and as such, it was assessed using traditional enforcement. This issue was determined to be a Severity Level IV violation in accordance with NRC Enforcement Policy examples provided in Section 6.9. No crosscutting aspect was assigned because the performance deficiency was assessed using traditional enforcement. Inspection Report# : 2012003 (pdf) Barrier Integrity Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Pressure Testing of the Reactor Vessel Flange Leak-Off Lines Inspectors identified a non-cited violation of 10 CFR 50.55a(g)(4) involving the licensees failure to perform a system pressure test of the reactor vessel flange leak off-line of Units 1, 2, and 3 in accordance with the applicable edition of Section XI of the ASME Code. Contrary to the above, prior to October 10, 2012, the licensee failed to perform the required pressure test of the reactor vessel flange seal leak-off line for all three units. Specifically, the licensee failed to implement the ASME Code, Section XI, Class 2 requirements for pressure retaining components as provided by Article IWC-5220, System Leakage Test. The licensee entered the finding into their corrective action program as Palo Verde Action Request 4269674. The inspectors determined that the licensees failure to perform a pressure test of the reactor vessel flange leak-off line was a performance deficiency. The performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of systems, structures and components and barrier performance, and adversely affects the cornerstone objective to provide a reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Manual Chapter 0609, Attachment A, The Significant Determination Process (SDP) for Findings At-Power, the finding was determined to be of very low safety significance (Green) because the finding did not result in exceeding the reactor coolant system leak rate for a small loss-of-coolant accident, and did not affect other systems used to mitigate a loss-of-coolant accident resulting in a total loss of their function. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Tracking of a Functional Assessment for Spent Fuel Pool Heat Load The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent administration of the examination. The licensee entered the finding into the corrective action program as Action Page 7 of 13

1Q/2013 Inspection Findings - Palo Verde 3 Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)] Inspection Report# : 2012005 (pdf) Emergency Preparedness Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to identify weak preformance during an exercise The inspectors identified a Green NCV of 10 CFR 50.47(b)(14) for the licensees failure to identify and correct a performance deficiency during an evaluated exercise. Specifically, the licensee failed to identify that the Emergency Director in the Simulator Control Room did not evaluate emergency action level RS-1 when information was available indicating a need to upgrade the emergency classification because of offsite radiation dose. The failure to identify a deficiency occurring during a drill and ensure correction is a performance deficiency within the licensees control. The finding is more than minor because the failure to identify a deficiency and ensure correction impacts the Emergency Preparedness cornerstone objective associated with the emergency response organization performance cornerstone attribute. The finding is a non-cited violation of 10 CFR 50.47(b)(14). The finding was evaluated using the Emergency Preparedness SDP and identified as having very low safety significance because it was a failure to comply with NRC requirements and was not a loss of the planning standard function because the classification deficiency was associated with a successful performance indicator opportunity. The Emergency Director declared the correct emergency classification within fifteen minutes of performing the dose assessment report using an emergency action level for which conditions currently existed, although this was not the first emergency action level that applied. This issue was entered into the CAP as PVAR 4365021. The finding was assigned a cross-cutting aspect of Low Threshold, because the licensee failed to completely and accurately recognize a performance deficiency [P.1.a] Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Technical Support Center Diesel Generator Not Restored Following Maintenance Page 8 of 13

1Q/2013 Inspection Findings - Palo Verde 3 A self revealing Green non-cited violation of 10 CFR 50.47(b)(8) was identified for the failure to maintain adequate facilities to support emergency response. Specifically, the licensee found the technical support center battery disconnect switch had not been restored following maintenance activities. This configuration would have rendered the diesel generator unable to start automatically as designed in the event of a loss of off-site power. The licensee initiated immediate corrective actions to restore the technical support center diesel generator to a functional configuration and has begun implementation of a more formal process for component configuration verification of critical technical support center equipment. The licensee has entered this issue into their corrective action program as Palo Verde Action Request 4165625. The failure to follow Procedure 40OP-9NG01 for performing a functional test of 480V switchgear following maintenance activities is a performance deficiency. This performance deficiency was more than minor because it is associated with the Emergency Preparedness Cornerstone attribute of facilities and equipment and it adversely affected the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green) because the degraded planning standard function did not result in the loss of technical support center functionality for longer than 7 days. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources. Specifically, the licensees work control procedures did not include critical technical support center systems to ensure that technical support center configuration control was maintained commensurate with its significance [H.2(c)] Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 50.54(q) Evaluation Inspectors identified a Severity Level IV, non-cited violation of 10 CFR 50.54 (q), Conditions of licenses, and an associated Green finding for the licensees failure to perform an appropriate design scope change, which resulted in the reduction in effectiveness of the emergency plan. Specifically, on May 19, 2011, the licensee completed a modification to revise protective area lightning power sources and removed ground fault protections on a circuit breaker attached to the bus, which powers the technical support center. This change created a condition that would remove power to the technical support center and prevent emergency plan required back up power from being able to power the bus. On August 10, 2012, a lighting fault caused a complete loss of power to the technical support center, demonstrating that this change decreased the effectiveness of the emergency plan. On September 26, 2012, the licensee reactivated the ground fault protection for the circuit breaker and established compensatory measures to restore power to ensure technical support center staffing will not be challenged. The licensee entered this into their corrective action program as condition report disposition request 4230209. The failure to perform an appropriate design scope change was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the facilities and equipment attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green). Additionally, the violation of 10 CFR 50.54 (q) impacted the ability of the NRC to perform its regulatory oversight function and was dispositioned using traditional enforcement. This violation was determined to be a Severity Level IV violation per Section 6.6 of the NRC Enforcement Policy because the violation was not associated with licensees ability to meet or implement any regulatory requirement related to assessment or notification. Page 9 of 13

1Q/2013 Inspection Findings - Palo Verde 3 Although the regulatory requirement could be implemented during the response to an actual emergency, the implementation would be degraded. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the work practices component because the licensee failed to ensure supervisory management and oversight of contractors such that nuclear safety is supported [H.4.(c)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Declare an Unusual Event The inspectors identified a Green non-cited violation of 10 CFR 50.54(q) for the failure of operations personnel to adequately implement the emergency plan. Specifically, on August 26, 2012, auxiliary operators felt vibratory ground motion inside the protected area at 12:31pm and again at 1:58pm. The United States Geological Survey (USGS) confirmed that two earthquakes, of magnitude 5.3 and 5.5 respectively, occurred at those times in the area of the plant. Plant operators did not declare an Unusual Event in accordance with the emergency plan. The licensee entered the issue into the corrective action program as PVAR 4255819 and initiated an apparent cause evaluation to identify the cause and corrective actions. The failure to implement the emergency plan and declare an Unusual Event was a performance deficiency. The performance deficiency was more than minor and therefore a finding, because it affected the Emergency Response Organization performance attribute of the Emergency Preparedness cornerstone and affected the cornerstone objective to ensure the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Using Manual Chapter 0609, Appendix B, "Emergency Preparedness Significance Determination Process," Attachment 1, the finding was determined to have very low safety - significance (Green) because the actual event implementation problem was associated with an Unusual Event. This finding has a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure training of personnel was adequate to assure proper implementation of the emergency plan [H.2.(b)]. Inspection Report# : 2012004 (pdf) Occupational Radiation Safety Significance: N/A Mar 31, 2013 Identified By: NRC Item Type: VIO Violation Failure to Maintain the Updated Final Safety Analysis Report for Radwaste Systems and Processes The inspectors identified a Severity Level IV violation of 10 CFR 50.71(e), Maintenance of Records, Making of Reports, with two examples for the failure to restore compliance within a reasonable time after a previous Severity Level IV non-cited violation of 10 CFR 50.71(e) was identified. The violation was identified because the licensee failed to periodically update the Updated Final Safety Analysis Report (UFSAR) with all changes made in the facility or procedures. Specifically, Example 1: From 1988 to 2013, the licensee did not update Chapter 11.2.2.3, Liquid Radwaste System, with a description of the temporary adsorption tanks and their use. The licensee has entered this violation into their corrective action program as PVAR 3075089. Example 2: From December 2003 to January 2013, the licensee made changes to the facility and procedures as described in the UFSAR, and performed safety analyses and evaluations in support of these changes, but failed to update the UFSAR to include these changes. Specifically, the licensee built the old steam generator storage facility used for long-term storage of radioactive waste (six replaced steam generators and three reactor vessel heads) on the Page 10 of 13

1Q/2013 Inspection Findings - Palo Verde 3 owner controlled site until decommissioning. The licensee has entered this violation into their corrective action program as Condition Report (CR) 3398042 and PVAR 4330483. This violation is more than minor because the NRC relies on licensees to identify and report conditions or events meeting the criteria specified in the regulations in order to perform its regulatory function. Because this issue affected the NRCs ability to perform its regulatory function, it was evaluated using the traditional enforcement process. The issue was characterized as a Severity Level IV violation in accordance with Section 6.1.d.3 of the NRC Enforcement Policy because the erroneous information in the UFSAR was not used to make an unacceptable change to the facility or procedures. A cross-cutting aspect was not assigned because the violation was handled through traditional enforcement. Inspection Report# : 2013002 (pdf) Significance: Jun 30, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Follow Procedures and Radiation Exposure Permit Requirements The inspectors reviewed a self-revealing non-cited violation of Technical Specification 5.4.1, because workers failed to follow radiation exposure permit requirements and entered high radiation area without authorization by entering the wrong room. As corrective action, the licensee coached the workers, restricted their access to the radiologically controlled area, and entered the issue into the corrective action program as CRDR 3988625. The failure to follow radiation exposure permit requirements is a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety Cornerstone attribute (exposure control) of program and process and affected the cornerstone objective, in that entering an area outside the scope of the radiation exposure permit and not knowing the associated dose rates in the high radiation area had the potential to increase personnel dose. Using the Occupational Radiation Safety Significance Determination Process, the inspectors determined the finding had a very low safety significance because: (1) it was not associated with ALARA planning or work controls, (2) there was no overexposure, (3) there was no substantial potential for an overexposure, and (4) the ability to assess dose was not compromised. The finding had a human performance cross-cutting aspect associated with work practices because the individuals did not use peer or self-checking before entering the unauthorized high radiation area [H.4(a)]. Inspection Report# : 2012003 (pdf) Public Radiation Safety Significance: Jun 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Verify a Transferee was Licensed to Receive Byproduct Material The inspector identified a non-cited violation of 10 CFR 30.41 because the licensee failed to verify a transferee was authorized to receive byproduct material before transferring it. This finding was entered in the licensees corrective action program as CRDR 4136342. The failure to verify a transferee is licensed to receive the type, form, and quantity of byproduct being transferred is a performance deficiency. The significance was more than minor because radioactive material was actually transferred to an entity which was not licensed to receive the material. Thus, the performance deficiency was associated with the cornerstone attribute of Program & Process and adversely affected the associated cornerstone objective because the Page 11 of 13

1Q/2013 Inspection Findings - Palo Verde 3 release of radioactive material to unlicensed entities could cause unplanned radiation dose or environmental contamination. Using Inspection Manual Chapter 0609, Appendix D, Public Radiation Safety Significance Determination Process, December 12, 2008, page D 13, the inspectors determined the violation had very low safety significance because the violation involved a radioactive material control issue, was not a transportation issue, and did not result in a dose to public of greater than 0.005 rem. This finding had a crosscutting aspect in the human performance area, work practices component, because personnel did not follow procedures [H.4(b)]. Inspection Report# : 2012003 (pdf) Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Request an Experience Waiver for a Reactor Operator License Applicant An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for failure to request an experience waiver on NRC Form 398 for a Reactor Operator license applicant who did not have three years of responsible nuclear power plant experience as required by NUREG 1021, Revision 9, Supplement 1, ES-202.D.1.a.(1). Upon discovery, the facility licensee submitted a revised NRC Form 398, which included the waiver request, and entered this issue into their corrective action program as Condition Report 4080143. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency had the potential for impacting the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . Because the performance deficiency was corrected before the issuance of a license and an experience waiver was ultimately granted, it did not cause the NRC to make an incorrect regulatory decision. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Significance: N/A May 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Page 12 of 13

1Q/2013 Inspection Findings - Palo Verde 3 Inaccurate Identification of an Open-Reference Initial Licensing Exam Question as Closed-Reference An NRC-identified non-cited violation of 10 CFR 50.9, Completeness and Accuracy of Information, was identified for submitting a final written exam question to the NRC which was identified and approved as Closed Reference, but administered by the licensee as Open Reference by supplying the applicants with an unapproved Technical Specification. On evaluation, the NRC determined that it would not have approved the question had it been properly identified as open-reference on submittal, because the reference made the question a direct lookup and the information in the reference was of a nature that licensed operators are expected to have memorized. No licensing decisions were affected and the facility licensee entered this issue into their corrective action program as Condition Report 4144197. The examiners evaluated this issue using the traditional enforcement process because the performance deficiency impacted the NRCs ability to perform its regulatory function. This performance deficiency was determined to be Severity Level IV because it fits the SL-IV example of Enforcement Policy Section 6.4.d, Violation Examples: Licensed Reactor Operators. This section states, Severity Level IV violations involve, for example cases of inaccurate or incomplete information inadvertently provided to the NRC that does [sic] not contribute to the NRC making an incorrect regulatory decision as a result of the originally submitted information or an unqualified individual performing the functions of an operator or senior operator . The performance deficiency did not cause the NRC to make an incorrect regulatory decision because it did not affect the number of applicants who passed. There is no Cross-Cutting Aspect associated with this violation because it was processed using Traditional Enforcement. Inspection Report# : 2012301 (pdf) Last modified : June 04, 2013 Page 13 of 13

2Q/2013 Inspection Findings - Palo Verde 3 Palo Verde 3 2Q/2013 Plant Inspection Findings Initiating Events Significance: Jun 30, 2013 Identified By: Self-Revealing Item Type: FIN Finding Failure to Implement Corrective Action for Embedded Operator Work Around A self-revealing finding occurred because the licensee did not take action to correct an embedded operator work around in the condensate system. Specifically, the licensee did not evaluate and develop a plan to correct the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode. As a result, a malfunction of the heater drain tank B level controller resulted in a feedwater pump B trip and a subsequent reactor power cutback. The licensee entered the issue into their corrective action program as PVAR 4330504 and revised operating procedures to allow the condensate polishing demineralizer bypass valve controller to operate in automatic control mode during full power operations. The failure to evaluate and determine corrective actions in accordance with established corrective action program procedures is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it was associated with the configuration control attribute of the Initiating Events Cornerstone and adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode resulted in a reactor power cutback that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination (SDP) for Findings At-Power to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it only contributed to the likelihood of a reactor trip and not the likelihood that mitigation equipment or functions would not be available. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2013003 (pdf) Mitigating Systems Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability The inspectors identified a Green NCV of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After one channel of initiation logic inadvertently tripped for the Unit 3 containment spray actuation signal portion of the engineered safety features actuation system, plant operators declared the channel inoperable and entered Technical Specification 3.3.6, Page 1 of 11

2Q/2013 Inspection Findings - Palo Verde 3 Engineered Safety Features Actuation System Logic and Manual Trip, Condition B. Before troubleshooting began, operators evaluated the condition, declared the channel operable, and exited the technical specification condition. Plant personnel subsequently restored the channel after troubleshooting. The inspectors concluded that plant personnel did not consider all required functions and design requirements of the system and should not have declared the channel operable before completing troubleshooting and restoring the system to normal operation. This issue is captured in the corrective action program as Condition Report Disposition Request 4350321. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because, if left uncorrected, the performance deficiency had the potential to lead to a more significant safety concern. Specifically, a spurious signal or channel failure would have resulted in an inadvertent actuation of containment spray in Unit 3. The inspectors evaluated the significance of the issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process for Findings at-Power. Inspectors concluded that the finding was of very low safety significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of resources because the licensee failed to provide sufficient training to plant personnel to ensure all aspects of the current licensing basis and design requirements are considered when evaluating degraded and non-conforming conditions for operability [H.2(b)]. Inspection Report# : 2013002 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Multiple Failures to Identify Conditions Adverse to Quality The inspectors identified two examples of a Green NCV of 10 CFR Part 50, Appendix B, Criterion XVI Corrective Action, for the failure of the licensee to promptly identify and correct conditions adverse to quality. Specifically, on July 19, 2012, personnel failed to follow Procedure 01DP-0AP12, Palo Verde Action Request Processing, and enter into the corrective action process a failure to comply with technical specifications to enter limiting condition for operation 3.0.3 when maintenance activities rendered safety related inverters inoperable. In addition, on May 2, 2011, the licensee also failed to enter an unanalyzed diversion of emergency core cooling system flow into the corrective action process, despite procedural guidance to the contrary. The licensee entered the issues into the corrective action program as Palo Verde Action Request (PVAR) 4347283 and PVAR 4389514 and is assessing corrective actions. The inspectors concluded that the failure to promptly identify and correct conditions adverse to quality was a performance deficiency. The inspectors determined the performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and its objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors determined the two issues had similar causal factors and should be documented as one NCV in accordance with NRC enforcement guidance. The inspectors evaluated the significance of each issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations. For the issue associated with inoperable safety related inverters, the inspectors determined the finding to be of very low safety significance (Green) because all questions in Exhibit 2.A could be answered no. For the issue associated with an unanalyzed condition of the high pressure safety injection system, the inspectors determined that the finding Page 2 of 11

2Q/2013 Inspection Findings - Palo Verde 3 represented a loss of system function and needed a detailed evaluation. The inspectors used the Palo Verde Standardized Plant Analysis Risk model, Revision 8.20, with a truncation limit of E-11 and performed a bounding significance determination and found the finding to be of very low safety significance (Green). The bounding change to the core damage frequency was 2.4E-9/year. The dominant core damage sequences included: medium break loss of coolant accident, system transient, and steam generator tube rupture. The very short exposure period minimized the significance. A Region IV senior reactor analyst reviewed the results and agreed with the conclustions. This finding has a cross-cutting aspect in the area of human performance associated with the decision making component because the licensee failed to use a systematic process for dealing uncertain conditions adverse to quality [H.1(a)]. Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct a Condition Adverse to Fire Protection The inspectors identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3 for the licensees failure to identify and correct a condition adverse to fire protection. Specifically, on November 19, 2012, inspectors questioned operations personnel and identified that operators did not know the locations of sound powered telephone equipment, were unfamiliar with their use, and unfamiliar with procedural guidance for their use. This is a communications device used for post-fire safe shutdown credited in the fire protection program and emergency plan. The lack of familiarity with location and use of these communication devices would have adversely affected operations personnel response to an emergency. The licensee completed a self-assessment of emergency preparedness communication on October 31, 2012, and did not identify these weaknesses. The licensee immediately issued a night order and informed operations personnel of the location of the sound powered phones and procedural guidance. The licensee entered this issue into the licensees corrective action program as Palo Verde Action Request 4294407. The failure to identify and correct a condition adverse to fire protection was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the human performance attribute of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process. The finding was determined to be a low degradation of the post-fire safe shutdown program element and screens to Green using Step 1.3.1. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the self and independent assessments component because the licensee failed to conduct a self-assessment of sufficient depth, that was comprehensive and self-critical, which failed to recognize that operator knowledge was lacking for the use of some communication device [P.3(a)]. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Licensed Operator Examination Integrity The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were Page 3 of 11

2Q/2013 Inspection Findings - Palo Verde 3 allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent administration of the examination. The licensee entered the finding into the corrective action program as Action Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)]. Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Correct Scupper Obstruction The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion XVI, Corrective Action, for the failure of the licensee to correct a condition adverse to quality. Specifically, on November 7, 2011, after the inspectors notified the licensee about scupper obstruction on safety related building roofs, the licensee failed to enter this issue into the corrective action program and take appropriate corrective actions to remove the obstructions. The licensee rediscovered this condition during post Fukushima walkdowns in response to a Request for Information pursuant to 10 CRF 50.54(f), removed the obstructions and established walkdowns to ensure the scuppers remained unobstructed. The licensee has entered the issue into the corrective action program as PVAR 4255561. The inspectors concluded that the failure of the licensee to correct a condition adverse to quality was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the protection against external events of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initialing events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety-significance (Green) because the finding did not result in the complete loss of a safety function due to an external event. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the corrective action program component because the licensee failed to have a low threshold for entering issues into the corrective action program [P.1(a)]. Inspection Report# : 2012004 (pdf) Page 4 of 11

2Q/2013 Inspection Findings - Palo Verde 3 Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Boric Acid Evaluation The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of engineering personnel to follow Procedure 70TI-9ZC01, Boric Acid Walkdown Leak Detection, to provide an adequate evaluation of an active boric acid leak. Specifically, an evaluation of a boric acid leak from the packing of the charging backpressure header control valve did not assess all consequences of continued operation. The licensee performed a subsequent boric acid leakage evaluation and determined that monitoring coupled with mitigating actions of cleaning and greasing all susceptible components was sufficient to support the functionality of the valve. The licensee will repair the valve at the soonest available opportunity; prior to restart after any maintenance or refueling outage. The inspectors concluded that the failure of the engineering personnel to provide an adequate evaluation of an active boric acid leak was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because if left uncorrected the performance deficiency could possibly become a more significant safety concern in that unevaluated boric acid leaks could result with unmitigated boric acid corrosion of components. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings. Inspectors determined that the finding affected the Mitigating Systems Cornerstone and using Inspection Manual Chapter 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety-significance (Green) because the finding is a design or qualification issue confirmed not to result in the loss of operability or functionality. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the decision making component because the licensee failed to make conservative assumptions and allowed corrosion of carbon steel components without an appropriate understanding of their function or unintended consequences [H.1(b)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Operability Determination for ARD Relay Failures The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After a ventilation damper failed to close during a functional stroke test, plant personnel did not consider previous operability determinations and failed to provide supporting analysis to confirm there was no reduction in reliability of ARD relays. This issue is captured in the corrective action program as PVAR 4255816. The licensee has successfully cycled all ARD relays which could be performed during at-power operations, scheduled testing for remaining relays, and initiated a design change document that will determine a permanent substitute for the ARD660UR DC relays. The failure of the operations and engineering personnel to follow Procedure 40DP-9OP26 to evaluate the operability of a structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded that the finding was of very low safety-significance (Green) because the finding is not a design or qualification issue, did Page 5 of 11

2Q/2013 Inspection Findings - Palo Verde 3 not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the results of the apparent cause evaluation for the first three ARD relay failures to the appropriate operations personnel [H.1(c)]. Inspection Report# : 2012004 (pdf) Barrier Integrity Significance: Jun 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operability Determination Procedure for Maintaining Administrative Limits The inspectors identified a Green noncited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the temperature limit established in the operability determination for the spent fuel pool criticality analysis was maintained. The licensee entered the issue into their corrective action program as PVAR 4380424, began taking more frequent readings of spent fuel pool temperature indicators, and lowered the spent fuel pool temperature alarm setpoint. The failure to follow Procedure 40DP-9OP26 for performing operability determinations is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it is associated with the Barrier Integrity Cornerstone attribute of procedure quality and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. The inspectors evaluated the significance of the finding using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power. The inspectors reviewed all Barrier Integrity screening questions in IMC 0609, Appendix A, Exhibit 3 Section D, and all questions were answered No. Therefore, the finding was determined to be of very low safety significance. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the administrative limits established in the spent fuel pool criticality operability determination to appropriate operations personnel [H.1(c)]. Inspection Report# : 2013003 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Pressure Testing of the Reactor Vessel Flange Leak-Off Lines Inspectors identified a non-cited violation of 10 CFR 50.55a(g)(4) involving the licensees failure to perform a system pressure test of the reactor vessel flange leak off-line of Units 1, 2, and 3 in accordance with the applicable edition of Section XI of the ASME Code. Contrary to the above, prior to October 10, 2012, the licensee failed to perform the required pressure test of the reactor vessel flange seal leak-off line for all three units. Specifically, the licensee failed to implement the ASME Code, Section XI, Class 2 requirements for pressure retaining components as provided by Article IWC-5220, System Leakage Test. The licensee entered the finding into their corrective action program as Palo Verde Action Request 4269674. Page 6 of 11

2Q/2013 Inspection Findings - Palo Verde 3 The inspectors determined that the licensees failure to perform a pressure test of the reactor vessel flange leak-off line was a performance deficiency. The performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of systems, structures and components and barrier performance, and adversely affects the cornerstone objective to provide a reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Manual Chapter 0609, Attachment A, The Significant Determination Process (SDP) for Findings At-Power, the finding was determined to be of very low safety significance (Green) because the finding did not result in exceeding the reactor coolant system leak rate for a small loss-of-coolant accident, and did not affect other systems used to mitigate a loss-of-coolant accident resulting in a total loss of their function. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Tracking of a Functional Assessment for Spent Fuel Pool Heat Load The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the heat load and temperature limits established in the functional assessment for the spent fuel pools were monitored. This issue is captured in Palo Verde Action Request 4251108. To restore compliance, the licensee issued a technical specification component condition record to prohibit entry into Mode 4 following a refueling outage, until decay heat load in the spent fuel pool is verified to be less than the more restrictive limit established in the functional assessment. The failure to follow Procedure 40DP-9OP26 for performing functional assessments is a performance deficiency. This performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of design control and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. Using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609 Appendix A, The Significance Determination Process (SDP) for Findings At-Power, the inspectors determined that the finding had very low safety significance (Green) because the finding was confirmed not to adversely affect decay heat removal capabilities from the spent fuel pool causing the pool temperature to exceed the maximum analyzed temperature limit specified in the site-specific licensing basis. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with decision making. Specifically, Palo Verde did not communicate the procedural limits established in the spent fuel pool functional assessment to appropriate operations personnel [H.1(c)]. Inspection Report# : 2012005 (pdf) Emergency Preparedness Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to identify weak preformance during an exercise The inspectors identified a Green NCV of 10 CFR 50.47(b)(14) for the licensees failure to identify and correct a Page 7 of 11

2Q/2013 Inspection Findings - Palo Verde 3 performance deficiency during an evaluated exercise. Specifically, the licensee failed to identify that the Emergency Director in the Simulator Control Room did not evaluate emergency action level RS-1 when information was available indicating a need to upgrade the emergency classification because of offsite radiation dose. The failure to identify a deficiency occurring during a drill and ensure correction is a performance deficiency within the licensees control. The finding is more than minor because the failure to identify a deficiency and ensure correction impacts the Emergency Preparedness cornerstone objective associated with the emergency response organization performance cornerstone attribute. The finding is a non-cited violation of 10 CFR 50.47(b)(14). The finding was evaluated using the Emergency Preparedness SDP and identified as having very low safety significance because it was a failure to comply with NRC requirements and was not a loss of the planning standard function because the classification deficiency was associated with a successful performance indicator opportunity. The Emergency Director declared the correct emergency classification within fifteen minutes of performing the dose assessment report using an emergency action level for which conditions currently existed, although this was not the first emergency action level that applied. This issue was entered into the CAP as PVAR 4365021. The finding was assigned a cross-cutting aspect of Low Threshold, because the licensee failed to completely and accurately recognize a performance deficiency [P.1.a] Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Technical Support Center Diesel Generator Not Restored Following Maintenance A self revealing Green non-cited violation of 10 CFR 50.47(b)(8) was identified for the failure to maintain adequate facilities to support emergency response. Specifically, the licensee found the technical support center battery disconnect switch had not been restored following maintenance activities. This configuration would have rendered the diesel generator unable to start automatically as designed in the event of a loss of off-site power. The licensee initiated immediate corrective actions to restore the technical support center diesel generator to a functional configuration and has begun implementation of a more formal process for component configuration verification of critical technical support center equipment. The licensee has entered this issue into their corrective action program as Palo Verde Action Request 4165625. The failure to follow Procedure 40OP-9NG01 for performing a functional test of 480V switchgear following maintenance activities is a performance deficiency. This performance deficiency was more than minor because it is associated with the Emergency Preparedness Cornerstone attribute of facilities and equipment and it adversely affected the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green) because the degraded planning standard function did not result in the loss of technical support center functionality for longer than 7 days. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources. Specifically, the licensees work control procedures did not include critical technical support center systems to ensure that technical support center configuration control was maintained commensurate with its significance [H.2(c)]. Inspection Report# : 2012005 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform 50.54(q) Evaluation Page 8 of 11

2Q/2013 Inspection Findings - Palo Verde 3 Inspectors identified a Severity Level IV, non-cited violation of 10 CFR 50.54 (q), Conditions of licenses, and an associated Green finding for the licensees failure to perform an appropriate design scope change, which resulted in the reduction in effectiveness of the emergency plan. Specifically, on May 19, 2011, the licensee completed a modification to revise protective area lightning power sources and removed ground fault protections on a circuit breaker attached to the bus, which powers the technical support center. This change created a condition that would remove power to the technical support center and prevent emergency plan required back up power from being able to power the bus. On August 10, 2012, a lighting fault caused a complete loss of power to the technical support center, demonstrating that this change decreased the effectiveness of the emergency plan. On September 26, 2012, the licensee reactivated the ground fault protection for the circuit breaker and established compensatory measures to restore power to ensure technical support center staffing will not be challenged. The licensee entered this into their corrective action program as condition report disposition request 4230209. The failure to perform an appropriate design scope change was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it affected the facilities and equipment attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green). Additionally, the violation of 10 CFR 50.54 (q) impacted the ability of the NRC to perform its regulatory oversight function and was dispositioned using traditional enforcement. This violation was determined to be a Severity Level IV violation per Section 6.6 of the NRC Enforcement Policy because the violation was not associated with licensees ability to meet or implement any regulatory requirement related to assessment or notification. Although the regulatory requirement could be implemented during the response to an actual emergency, the implementation would be degraded. The inspectors determined this finding has a crosscutting aspect in the area of human performance associated with the work practices component because the licensee failed to ensure supervisory management and oversight of contractors such that nuclear safety is supported [H.4.(c)]. Inspection Report# : 2012004 (pdf) Significance: Sep 30, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Declare an Unusual Event The inspectors identified a Green non-cited violation of 10 CFR 50.54(q) for the failure of operations personnel to adequately implement the emergency plan. Specifically, on August 26, 2012, auxiliary operators felt vibratory ground motion inside the protected area at 12:31pm and again at 1:58pm. The United States Geological Survey (USGS) confirmed that two earthquakes, of magnitude 5.3 and 5.5 respectively, occurred at those times in the area of the plant. Plant operators did not declare an Unusual Event in accordance with the emergency plan. The licensee entered the issue into the corrective action program as PVAR 4255819 and initiated an apparent cause evaluation to identify the cause and corrective actions. The failure to implement the emergency plan and declare an Unusual Event was a performance deficiency. The performance deficiency was more than minor and therefore a finding, because it affected the Emergency Response Organization performance attribute of the Emergency Preparedness cornerstone and affected the cornerstone objective to ensure the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Using Manual Chapter 0609, Appendix B, "Emergency Preparedness Significance Determination Process," Attachment 1, the finding was determined to have very low safety - significance (Green) because the actual event implementation problem was associated with an Unusual Event. This finding has a crosscutting aspect in the area of human performance associated with the resources component because the licensee failed to ensure training of personnel was adequate to assure proper implementation of the emergency plan [H.2.(b)]. Page 9 of 11

2Q/2013 Inspection Findings - Palo Verde 3 Inspection Report# : 2012004 (pdf) Occupational Radiation Safety Significance: N/A Mar 31, 2013 Identified By: NRC Item Type: VIO Violation Failure to Maintain the Updated Final Safety Analysis Report for Radwaste Systems and Processes The inspectors identified a Severity Level IV violation of 10 CFR 50.71(e), Maintenance of Records, Making of Reports, with two examples for the failure to restore compliance within a reasonable time after a previous Severity Level IV non-cited violation of 10 CFR 50.71(e) was identified. The violation was identified because the licensee failed to periodically update the Updated Final Safety Analysis Report (UFSAR) with all changes made in the facility or procedures. Specifically, Example 1: From 1988 to 2013, the licensee did not update Chapter 11.2.2.3, Liquid Radwaste System, with a description of the temporary adsorption tanks and their use. The licensee has entered this violation into their corrective action program as PVAR 3075089. Example 2: From December 2003 to January 2013, the licensee made changes to the facility and procedures as described in the UFSAR, and performed safety analyses and evaluations in support of these changes, but failed to update the UFSAR to include these changes. Specifically, the licensee built the old steam generator storage facility used for long-term storage of radioactive waste (six replaced steam generators and three reactor vessel heads) on the owner controlled site until decommissioning. The licensee has entered this violation into their corrective action program as Condition Report (CR) 3398042 and PVAR 4330483. This violation is more than minor because the NRC relies on licensees to identify and report conditions or events meeting the criteria specified in the regulations in order to perform its regulatory function. Because this issue affected the NRCs ability to perform its regulatory function, it was evaluated using the traditional enforcement process. The issue was characterized as a Severity Level IV violation in accordance with Section 6.1.d.3 of the NRC Enforcement Policy because the erroneous information in the UFSAR was not used to make an unacceptable change to the facility or procedures. A cross-cutting aspect was not assigned because the violation was handled through traditional enforcement. Inspection Report# : 2013002 (pdf) Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Page 10 of 11

2Q/2013 Inspection Findings - Palo Verde 3 Miscellaneous Last modified : September 03, 2013 Page 11 of 11

3Q/2013 Inspection Findings - Palo Verde 3 Palo Verde 3 3Q/2013 Plant Inspection Findings Initiating Events Significance: Sep 30, 2013 Identified By: NRC Item Type: FIN Finding Failure to Include Requirements in Preventative Maintenance Basis The inspectors identified a Green finding for the failure of licensee personnel to follow Procedure 30DP-9MP08, Preventive Maintenance Program. Specifically, plant personnel did not ensure that requirements for performing inspection and replacement of degraded tie-wraps in electrical cubicles were contained in preventative maintenance basis documents. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to a catastrophic electrical fault on July 2, 2013. The licensee rebuilt the load center cubicle and has entered this issue into their corrective action program as PVAR 4454845. The failure to follow established procedures for updating preventive maintenance basis documents with requirements and recommendations from previous component failures was a performance deficiency. This performance deficiency is more than minor because it was associated with the procedure quality attribute of the Initiating Events Cornerstone and adversely affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, by not including the requirements and recommendations from the history of previous failures in the preventive maintenance basis, pertinent operating experience was not considered when evaluating changes to the preventive maintenance program. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to experiencing a catastrophic electrical fault on July 2, 2013 that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. The inspectors also determined the issue had a cross-cutting aspect in the area problem identification and resolution associated with the operating experience component because the licensee did not implement and institutionalize operating experience through changes to the stations preventive maintenance program [P.2(b)]. Inspection Report# : 2013004 (pdf) Significance: Jun 30, 2013 Identified By: Self-Revealing Item Type: FIN Finding Failure to Implement Corrective Action for Embedded Operator Work Around A self-revealing finding occurred because the licensee did not take action to correct an embedded operator work around in the condensate system. Specifically, the licensee did not evaluate and develop a plan to correct the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode. As a result, a malfunction of the heater drain tank B level controller resulted in a feedwater pump B trip and a subsequent reactor power cutback. The licensee entered the issue into their corrective action program as PVAR 4330504 and revised operating procedures to allow the condensate polishing demineralizer bypass valve controller to operate in automatic control mode during full power operations. Page 1 of 9

3Q/2013 Inspection Findings - Palo Verde 3 The failure to evaluate and determine corrective actions in accordance with established corrective action program procedures is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it was associated with the configuration control attribute of the Initiating Events Cornerstone and adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode resulted in a reactor power cutback that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination (SDP) for Findings At-Power to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it only contributed to the likelihood of a reactor trip and not the likelihood that mitigation equipment or functions would not be available. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2013003 (pdf) Mitigating Systems Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability The inspectors identified a Green NCV of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After one channel of initiation logic inadvertently tripped for the Unit 3 containment spray actuation signal portion of the engineered safety features actuation system, plant operators declared the channel inoperable and entered Technical Specification 3.3.6, Engineered Safety Features Actuation System Logic and Manual Trip, Condition B. Before troubleshooting began, operators evaluated the condition, declared the channel operable, and exited the technical specification condition. Plant personnel subsequently restored the channel after troubleshooting. The inspectors concluded that plant personnel did not consider all required functions and design requirements of the system and should not have declared the channel operable before completing troubleshooting and restoring the system to normal operation. This issue is captured in the corrective action program as Condition Report Disposition Request 4350321. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because, if left uncorrected, the performance deficiency had the potential to lead to a more significant safety concern. Specifically, a spurious signal or channel failure would have resulted in an inadvertent actuation of containment spray in Unit 3. The inspectors evaluated the significance of the issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process for Findings at-Power. Inspectors concluded that the finding was of very low safety significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of resources because the licensee failed to provide sufficient training to plant personnel to ensure all aspects of the current licensing basis and design requirements are considered when evaluating degraded and non-conforming conditions for operability [H.2(b)]. Page 2 of 9

3Q/2013 Inspection Findings - Palo Verde 3 Inspection Report# : 2013002 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Multiple Failures to Identify Conditions Adverse to Quality The inspectors identified two examples of a Green NCV of 10 CFR Part 50, Appendix B, Criterion XVI Corrective Action, for the failure of the licensee to promptly identify and correct conditions adverse to quality. Specifically, on July 19, 2012, personnel failed to follow Procedure 01DP-0AP12, Palo Verde Action Request Processing, and enter into the corrective action process a failure to comply with technical specifications to enter limiting condition for operation 3.0.3 when maintenance activities rendered safety related inverters inoperable. In addition, on May 2, 2011, the licensee also failed to enter an unanalyzed diversion of emergency core cooling system flow into the corrective action process, despite procedural guidance to the contrary. The licensee entered the issues into the corrective action program as Palo Verde Action Request (PVAR) 4347283 and PVAR 4389514 and is assessing corrective actions. The inspectors concluded that the failure to promptly identify and correct conditions adverse to quality was a performance deficiency. The inspectors determined the performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and its objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors determined the two issues had similar causal factors and should be documented as one NCV in accordance with NRC enforcement guidance. The inspectors evaluated the significance of each issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations. For the issue associated with inoperable safety related inverters, the inspectors determined the finding to be of very low safety significance (Green) because all questions in Exhibit 2.A could be answered no. For the issue associated with an unanalyzed condition of the high pressure safety injection system, the inspectors determined that the finding represented a loss of system function and needed a detailed evaluation. The inspectors used the Palo Verde Standardized Plant Analysis Risk model, Revision 8.20, with a truncation limit of E-11 and performed a bounding significance determination and found the finding to be of very low safety significance (Green). The bounding change to the core damage frequency was 2.4E-9/year. The dominant core damage sequences included: medium break loss of coolant accident, system transient, and steam generator tube rupture. The very short exposure period minimized the significance. A Region IV senior reactor analyst reviewed the results and agreed with the conclustions. This finding has a cross-cutting aspect in the area of human performance associated with the decision making component because the licensee failed to use a systematic process for dealing uncertain conditions adverse to quality [H.1(a)]. Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Identify and Correct a Condition Adverse to Fire Protection The inspectors identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Palo Verde Units 1, 2, and 3 for the licensees failure to identify and correct a condition adverse to fire protection. Specifically, on November 19, 2012, inspectors questioned operations personnel and identified that operators did not know the locations of sound powered telephone equipment, were unfamiliar with their use, and unfamiliar with procedural guidance for their use. This is a communications device used for post-fire safe shutdown credited in the fire protection Page 3 of 9

3Q/2013 Inspection Findings - Palo Verde 3 program and emergency plan. The lack of familiarity with location and use of these communication devices would have adversely affected operations personnel response to an emergency. The licensee completed a self-assessment of emergency preparedness communication on October 31, 2012, and did not identify these weaknesses. The licensee immediately issued a night order and informed operations personnel of the location of the sound powered phones and procedural guidance. The licensee entered this issue into the licensees corrective action program as Palo Verde Action Request 4294407. The failure to identify and correct a condition adverse to fire protection was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the human performance attribute of the Mitigating Systems Cornerstone and its objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix F, Fire Protection Significance Determination Process. The finding was determined to be a low degradation of the post-fire safe shutdown program element and screens to Green using Step 1.3.1. The inspectors determined this finding has a crosscutting aspect in the area of problem identification and resolution associated with the self and independent assessments component because the licensee failed to conduct a self-assessment of sufficient depth, that was comprehensive and self-critical, which failed to recognize that operator knowledge was lacking for the use of some communication device [P.3(a)]. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain Licensed Operator Examination Integrity The inspectors identified a non-cited violation of 10 CFR 55.49, Integrity of Examinations and Tests, for the failure of the licensee to ensure the integrity of the licensed operator biennial written examinations. During the 2012 biennial written examination cycle, the exams were administered in a simulator environment that lacked positive controls to ensure that operators could not observe the reference material or examinations of other operators. Operators were allowed to review engineering schematics while standing at a table which allowed an angle to observe the computer screen and desk of another examinee approximately 5 feet away. Having the ability to view exam reference material being displayed on the computer screen during exam administration is considered an exam integrity compromise. However, an evaluation of the written exam results and interviews with the licensed operators signed in on an exam security agreement showed that the compromise did not have an actual effect on the equitable and consistent administration of the examination. The licensee entered the finding into the corrective action program as Action Request PVAR-4238204. The failure of the licensees training staff to maintain the integrity of examinations administered to licensed operations personnel was a performance deficiency. The performance deficiency was more than minor because it adversely affected the Human Performance attribute of the Mitigating Systems Cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Additionally, if left uncorrected, the performance deficiency could have become more significant in that allowing licensed operators to return to the control room without valid demonstration of appropriate knowledge on the biennial written examinations could be a precursor to a more significant event. Using NRC Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Table 1 and 2 worksheets; and the corresponding Appendix I, Licensed Operator Requalification Significance Determination Process, the finding was determined to have very low safety significance (Green). Although the 2012 finding resulted in a compromise of the integrity of biennial written examinations, compensatory actions were immediately taken, and the equitable and consistent administration of the biennial written examination was not actually affected by this compromise. This finding has a cross-cutting aspect in the area of human performance associated with the work control component because the Page 4 of 9

3Q/2013 Inspection Findings - Palo Verde 3 licensee failed to adequately plan work activities that incorporated job site conditions, including environmental conditions [H.3(a)]. Inspection Report# : 2012005 (pdf) Barrier Integrity Significance: Jun 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operability Determination Procedure for Maintaining Administrative Limits The inspectors identified a Green noncited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the temperature limit established in the operability determination for the spent fuel pool criticality analysis was maintained. The licensee entered the issue into their corrective action program as PVAR 4380424, began taking more frequent readings of spent fuel pool temperature indicators, and lowered the spent fuel pool temperature alarm setpoint. The failure to follow Procedure 40DP-9OP26 for performing operability determinations is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it is associated with the Barrier Integrity Cornerstone attribute of procedure quality and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. The inspectors evaluated the significance of the finding using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power. The inspectors reviewed all Barrier Integrity screening questions in IMC 0609, Appendix A, Exhibit 3 Section D, and all questions were answered No. Therefore, the finding was determined to be of very low safety significance. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the administrative limits established in the spent fuel pool criticality operability determination to appropriate operations personnel [H.1(c)]. Inspection Report# : 2013003 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Failure to Perform Pressure Testing of the Reactor Vessel Flange Leak-Off Lines Inspectors identified a non-cited violation of 10 CFR 50.55a(g)(4) involving the licensees failure to perform a system pressure test of the reactor vessel flange leak off-line of Units 1, 2, and 3 in accordance with the applicable edition of Section XI of the ASME Code. Contrary to the above, prior to October 10, 2012, the licensee failed to perform the required pressure test of the reactor vessel flange seal leak-off line for all three units. Specifically, the licensee failed to implement the ASME Code, Section XI, Class 2 requirements for pressure retaining components as provided by Article IWC-5220, System Leakage Test. The licensee entered the finding into their corrective action program as Palo Verde Action Request 4269674. The inspectors determined that the licensees failure to perform a pressure test of the reactor vessel flange leak-off line was a performance deficiency. The performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of systems, structures and components and barrier performance, and adversely Page 5 of 9

3Q/2013 Inspection Findings - Palo Verde 3 affects the cornerstone objective to provide a reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accidents or events. Using Manual Chapter 0609, Attachment A, The Significant Determination Process (SDP) for Findings At-Power, the finding was determined to be of very low safety significance (Green) because the finding did not result in exceeding the reactor coolant system leak rate for a small loss-of-coolant accident, and did not affect other systems used to mitigate a loss-of-coolant accident resulting in a total loss of their function. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2012005 (pdf) Significance: Dec 31, 2012 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Tracking of a Functional Assessment for Spent Fuel Pool Heat Load The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the heat load and temperature limits established in the functional assessment for the spent fuel pools were monitored. This issue is captured in Palo Verde Action Request 4251108. To restore compliance, the licensee issued a technical specification component condition record to prohibit entry into Mode 4 following a refueling outage, until decay heat load in the spent fuel pool is verified to be less than the more restrictive limit established in the functional assessment. The failure to follow Procedure 40DP-9OP26 for performing functional assessments is a performance deficiency. This performance deficiency was more than minor because it is associated with the Barrier Integrity Cornerstone attribute of design control and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. Using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609 Appendix A, The Significance Determination Process (SDP) for Findings At-Power, the inspectors determined that the finding had very low safety significance (Green) because the finding was confirmed not to adversely affect decay heat removal capabilities from the spent fuel pool causing the pool temperature to exceed the maximum analyzed temperature limit specified in the site-specific licensing basis. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with decision making. Specifically, Palo Verde did not communicate the procedural limits established in the spent fuel pool functional assessment to appropriate operations personnel [H.1(c)]. Inspection Report# : 2012005 (pdf) Emergency Preparedness Significance: Sep 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain an effective Emergency Plan for a Seismic Event The inspectors identified a non-cited violation of 10 CFR 50.54 (q)(2) for the failure to maintain an effective emergency plan action level scheme in accordance with 50.47(b)(4). Specifically, the Alert threshold for HA1.1, Natural or Destructive Phenomena Affecting VITAL AREAS, requires a declaration of an Alert for a seismic event greater than operating basis earthquake as indicated by any force balance accelerometer reading greater than 0.10g. Operators rely on alarms to verify the acceleration beyond the operating basis earthquake and the inspectors Page 6 of 9

3Q/2013 Inspection Findings - Palo Verde 3 determined the seismic monitor alarm set point was 0.13g. This could result with the inability of operations personnel to classify an event at the Alert level. A design change modified the seismic monitoring set point to 0.1g and restored compliance. The licensee entered the issue into their corrective action program as Palo Verde Action Request 3624077. The inspectors determined that the failure to maintain an effective emergency action level scheme was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Specifically, the licensees ability to declare an Alert based on Natural Phenomenon at the correct threshold was degraded. The inspectors assessed the significance of the finding in accordance with NRC Inspection Manual Chapter (IMC) 0609, Appendix B, Emergency Preparedness Significance Determination Process, Figure 5.4-1, and determined the finding to be of very low safety significance because compensatory measures were available for emergency response organization personnel to perform the classification duties. The inspectors determined this finding is not indicative of current performance and therefore no cross-cutting aspect is assigned. Inspection Report# : 2013004 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to identify weak preformance during an exercise The inspectors identified a Green NCV of 10 CFR 50.47(b)(14) for the licensees failure to identify and correct a performance deficiency during an evaluated exercise. Specifically, the licensee failed to identify that the Emergency Director in the Simulator Control Room did not evaluate emergency action level RS-1 when information was available indicating a need to upgrade the emergency classification because of offsite radiation dose. The failure to identify a deficiency occurring during a drill and ensure correction is a performance deficiency within the licensees control. The finding is more than minor because the failure to identify a deficiency and ensure correction impacts the Emergency Preparedness cornerstone objective associated with the emergency response organization performance cornerstone attribute. The finding is a non-cited violation of 10 CFR 50.47(b)(14). The finding was evaluated using the Emergency Preparedness SDP and identified as having very low safety significance because it was a failure to comply with NRC requirements and was not a loss of the planning standard function because the classification deficiency was associated with a successful performance indicator opportunity. The Emergency Director declared the correct emergency classification within fifteen minutes of performing the dose assessment report using an emergency action level for which conditions currently existed, although this was not the first emergency action level that applied. This issue was entered into the CAP as PVAR 4365021. The finding was assigned a cross-cutting aspect of Low Threshold, because the licensee failed to completely and accurately recognize a performance deficiency [P.1.a] Inspection Report# : 2013002 (pdf) Significance: Dec 31, 2012 Identified By: Self-Revealing Item Type: NCV NonCited Violation Technical Support Center Diesel Generator Not Restored Following Maintenance A self revealing Green non-cited violation of 10 CFR 50.47(b)(8) was identified for the failure to maintain adequate facilities to support emergency response. Specifically, the licensee found the technical support center battery disconnect switch had not been restored following maintenance activities. This configuration would have rendered the diesel generator unable to start automatically as designed in the event of a loss of off-site power. The licensee initiated immediate corrective actions to restore the technical support center diesel generator to a functional configuration and Page 7 of 9

3Q/2013 Inspection Findings - Palo Verde 3 has begun implementation of a more formal process for component configuration verification of critical technical support center equipment. The licensee has entered this issue into their corrective action program as Palo Verde Action Request 4165625. The failure to follow Procedure 40OP-9NG01 for performing a functional test of 480V switchgear following maintenance activities is a performance deficiency. This performance deficiency was more than minor because it is associated with the Emergency Preparedness Cornerstone attribute of facilities and equipment and it adversely affected the cornerstone objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Manual Chapter 0609, Appendix B, Emergency Preparedness Significance Determination Process. The finding was determined to be of very low safety significance (Green) because the degraded planning standard function did not result in the loss of technical support center functionality for longer than 7 days. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources. Specifically, the licensees work control procedures did not include critical technical support center systems to ensure that technical support center configuration control was maintained commensurate with its significance [H.2(c)]. Inspection Report# : 2012005 (pdf) Occupational Radiation Safety Significance: N/A Mar 31, 2013 Identified By: NRC Item Type: VIO Violation Failure to Maintain the Updated Final Safety Analysis Report for Radwaste Systems and Processes The inspectors identified a Severity Level IV violation of 10 CFR 50.71(e), Maintenance of Records, Making of Reports, with two examples for the failure to restore compliance within a reasonable time after a previous Severity Level IV non-cited violation of 10 CFR 50.71(e) was identified. The violation was identified because the licensee failed to periodically update the Updated Final Safety Analysis Report (UFSAR) with all changes made in the facility or procedures. Specifically, Example 1: From 1988 to 2013, the licensee did not update Chapter 11.2.2.3, Liquid Radwaste System, with a description of the temporary adsorption tanks and their use. The licensee has entered this violation into their corrective action program as PVAR 3075089. Example 2: From December 2003 to January 2013, the licensee made changes to the facility and procedures as described in the UFSAR, and performed safety analyses and evaluations in support of these changes, but failed to update the UFSAR to include these changes. Specifically, the licensee built the old steam generator storage facility used for long-term storage of radioactive waste (six replaced steam generators and three reactor vessel heads) on the owner controlled site until decommissioning. The licensee has entered this violation into their corrective action program as Condition Report (CR) 3398042 and PVAR 4330483. This violation is more than minor because the NRC relies on licensees to identify and report conditions or events meeting the criteria specified in the regulations in order to perform its regulatory function. Because this issue affected the NRCs ability to perform its regulatory function, it was evaluated using the traditional enforcement process. The issue was characterized as a Severity Level IV violation in accordance with Section 6.1.d.3 of the NRC Enforcement Policy because the erroneous information in the UFSAR was not used to make an unacceptable change to the facility or procedures. A cross-cutting aspect was not assigned because the violation was handled through traditional enforcement. Inspection Report# : 2013002 (pdf) Page 8 of 9

3Q/2013 Inspection Findings - Palo Verde 3 Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : December 03, 2013 Page 9 of 9

4Q/2013 Inspection Findings - Palo Verde 3 Palo Verde 3 4Q/2013 Plant Inspection Findings Initiating Events Significance: Sep 30, 2013 Identified By: NRC Item Type: FIN Finding Failure to Include Requirements in Preventative Maintenance Basis The inspectors identified a Green finding for the failure of licensee personnel to follow Procedure 30DP-9MP08, Preventive Maintenance Program. Specifically, plant personnel did not ensure that requirements for performing inspection and replacement of degraded tie-wraps in electrical cubicles were contained in preventative maintenance basis documents. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to a catastrophic electrical fault on July 2, 2013. The licensee rebuilt the load center cubicle and has entered this issue into their corrective action program as PVAR 4454845. The failure to follow established procedures for updating preventive maintenance basis documents with requirements and recommendations from previous component failures was a performance deficiency. This performance deficiency is more than minor because it was associated with the procedure quality attribute of the Initiating Events Cornerstone and adversely affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, by not including the requirements and recommendations from the history of previous failures in the preventive maintenance basis, pertinent operating experience was not considered when evaluating changes to the preventive maintenance program. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to experiencing a catastrophic electrical fault on July 2, 2013 that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. The inspectors also determined the issue had a cross-cutting aspect in the area problem identification and resolution associated with the operating experience component because the licensee did not implement and institutionalize operating experience through changes to the stations preventive maintenance program [P.2(b)]. Inspection Report# : 2013004 (pdf) Significance: Jun 30, 2013 Identified By: Self-Revealing Item Type: FIN Finding Failure to Implement Corrective Action for Embedded Operator Work Around A self-revealing finding occurred because the licensee did not take action to correct an embedded operator work around in the condensate system. Specifically, the licensee did not evaluate and develop a plan to correct the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode. As a result, a malfunction of the heater drain tank B level controller resulted in a feedwater pump B trip and a subsequent reactor power cutback. The licensee entered the issue into their corrective action program as PVAR 4330504 and revised operating procedures to allow the condensate polishing demineralizer bypass valve controller to operate in automatic control mode during full power operations. Page 1 of 7

4Q/2013 Inspection Findings - Palo Verde 3 The failure to evaluate and determine corrective actions in accordance with established corrective action program procedures is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it was associated with the configuration control attribute of the Initiating Events Cornerstone and adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode resulted in a reactor power cutback that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination (SDP) for Findings At-Power to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it only contributed to the likelihood of a reactor trip and not the likelihood that mitigation equipment or functions would not be available. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2013003 (pdf) Mitigating Systems Significance: Dec 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Modification of Safety Related Accumulators DRAFT The inspectors identified a green non-cited violation of 10 CFR 50, Appendix B, Criterion III, Design Control, for the failure to assure that a modification to the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components. Specifically, on September 4, 2009, the licensee failed to assess the suitability of a small dead band for a thermal relief valve in the accumulator valve manifold assembly and the impact to reliable operation of the associated valves. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4429273. The licensee isolated the thermal relief valve from the actuators. The failure to assure that the modification of the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components was a performance deficiency. The performance deficiency is more than minor because it was associated with the Mitigating Systems Cornerstone attribute of equipment performance and it adversely affect the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. Inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered no. The finding had a cross-cutting aspect in the area of human performance associated with resources component because the licensee did not maintain design margins by minimizing long standing equipment issues. Inspection Report# : 2013005 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability Page 2 of 7

4Q/2013 Inspection Findings - Palo Verde 3 The inspectors identified a Green NCV of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. After one channel of initiation logic inadvertently tripped for the Unit 3 containment spray actuation signal portion of the engineered safety features actuation system, plant operators declared the channel inoperable and entered Technical Specification 3.3.6, Engineered Safety Features Actuation System Logic and Manual Trip, Condition B. Before troubleshooting began, operators evaluated the condition, declared the channel operable, and exited the technical specification condition. Plant personnel subsequently restored the channel after troubleshooting. The inspectors concluded that plant personnel did not consider all required functions and design requirements of the system and should not have declared the channel operable before completing troubleshooting and restoring the system to normal operation. This issue is captured in the corrective action program as Condition Report Disposition Request 4350321. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because, if left uncorrected, the performance deficiency had the potential to lead to a more significant safety concern. Specifically, a spurious signal or channel failure would have resulted in an inadvertent actuation of containment spray in Unit 3. The inspectors evaluated the significance of the issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process for Findings at-Power. Inspectors concluded that the finding was of very low safety significance (Green) because the finding is not a design or qualification issue, did not represent an actual loss of safety function of the system or train, did not result in the loss of one or more trains of non-technical specification equipment, and did not screen as potentially risk significant due to a seismic, flooding, or severe weather initiating event. The inspectors determined this finding has a cross-cutting aspect in the area of human performance associated with the component of resources because the licensee failed to provide sufficient training to plant personnel to ensure all aspects of the current licensing basis and design requirements are considered when evaluating degraded and non-conforming conditions for operability [H.2(b)]. Inspection Report# : 2013002 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Multiple Failures to Identify Conditions Adverse to Quality The inspectors identified two examples of a Green NCV of 10 CFR Part 50, Appendix B, Criterion XVI Corrective Action, for the failure of the licensee to promptly identify and correct conditions adverse to quality. Specifically, on July 19, 2012, personnel failed to follow Procedure 01DP-0AP12, Palo Verde Action Request Processing, and enter into the corrective action process a failure to comply with technical specifications to enter limiting condition for operation 3.0.3 when maintenance activities rendered safety related inverters inoperable. In addition, on May 2, 2011, the licensee also failed to enter an unanalyzed diversion of emergency core cooling system flow into the corrective action process, despite procedural guidance to the contrary. The licensee entered the issues into the corrective action program as Palo Verde Action Request (PVAR) 4347283 and PVAR 4389514 and is assessing corrective actions. The inspectors concluded that the failure to promptly identify and correct conditions adverse to quality was a performance deficiency. The inspectors determined the performance deficiency is more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and its objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors determined the two issues had similar causal factors and should be documented as one NCV in accordance with NRC enforcement guidance. The inspectors evaluated the significance of Page 3 of 7

4Q/2013 Inspection Findings - Palo Verde 3 each issue under the SDP, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, Significance Determination of Reactor Inspection Findings for At-Power Situations. For the issue associated with inoperable safety related inverters, the inspectors determined the finding to be of very low safety significance (Green) because all questions in Exhibit 2.A could be answered no. For the issue associated with an unanalyzed condition of the high pressure safety injection system, the inspectors determined that the finding represented a loss of system function and needed a detailed evaluation. The inspectors used the Palo Verde Standardized Plant Analysis Risk model, Revision 8.20, with a truncation limit of E-11 and performed a bounding significance determination and found the finding to be of very low safety significance (Green). The bounding change to the core damage frequency was 2.4E-9/year. The dominant core damage sequences included: medium break loss of coolant accident, system transient, and steam generator tube rupture. The very short exposure period minimized the significance. A Region IV senior reactor analyst reviewed the results and agreed with the conclustions. This finding has a cross-cutting aspect in the area of human performance associated with the decision making component because the licensee failed to use a systematic process for dealing uncertain conditions adverse to quality [H.1(a)]. Inspection Report# : 2013002 (pdf) Barrier Integrity Significance: Jun 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operability Determination Procedure for Maintaining Administrative Limits The inspectors identified a Green noncited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the temperature limit established in the operability determination for the spent fuel pool criticality analysis was maintained. The licensee entered the issue into their corrective action program as PVAR 4380424, began taking more frequent readings of spent fuel pool temperature indicators, and lowered the spent fuel pool temperature alarm setpoint. The failure to follow Procedure 40DP-9OP26 for performing operability determinations is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it is associated with the Barrier Integrity Cornerstone attribute of procedure quality and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. The inspectors evaluated the significance of the finding using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power. The inspectors reviewed all Barrier Integrity screening questions in IMC 0609, Appendix A, Exhibit 3 Section D, and all questions were answered No. Therefore, the finding was determined to be of very low safety significance. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the administrative limits established in the spent fuel pool criticality operability determination to appropriate operations personnel [H.1(c)]. Inspection Report# : 2013003 (pdf) Emergency Preparedness Page 4 of 7

4Q/2013 Inspection Findings - Palo Verde 3 Significance: Sep 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain an effective Emergency Plan for a Seismic Event The inspectors identified a non-cited violation of 10 CFR 50.54 (q)(2) for the failure to maintain an effective emergency plan action level scheme in accordance with 50.47(b)(4). Specifically, the Alert threshold for HA1.1, Natural or Destructive Phenomena Affecting VITAL AREAS, requires a declaration of an Alert for a seismic event greater than operating basis earthquake as indicated by any force balance accelerometer reading greater than 0.10g. Operators rely on alarms to verify the acceleration beyond the operating basis earthquake and the inspectors determined the seismic monitor alarm set point was 0.13g. This could result with the inability of operations personnel to classify an event at the Alert level. A design change modified the seismic monitoring set point to 0.1g and restored compliance. The licensee entered the issue into their corrective action program as Palo Verde Action Request 3624077. The inspectors determined that the failure to maintain an effective emergency action level scheme was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Specifically, the licensees ability to declare an Alert based on Natural Phenomenon at the correct threshold was degraded. The inspectors assessed the significance of the finding in accordance with NRC Inspection Manual Chapter (IMC) 0609, Appendix B, Emergency Preparedness Significance Determination Process, Figure 5.4-1, and determined the finding to be of very low safety significance because compensatory measures were available for emergency response organization personnel to perform the classification duties. The inspectors determined this finding is not indicative of current performance and therefore no cross-cutting aspect is assigned. Inspection Report# : 2013004 (pdf) Significance: Mar 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to identify weak preformance during an exercise The inspectors identified a Green NCV of 10 CFR 50.47(b)(14) for the licensees failure to identify and correct a performance deficiency during an evaluated exercise. Specifically, the licensee failed to identify that the Emergency Director in the Simulator Control Room did not evaluate emergency action level RS-1 when information was available indicating a need to upgrade the emergency classification because of offsite radiation dose. The failure to identify a deficiency occurring during a drill and ensure correction is a performance deficiency within the licensees control. The finding is more than minor because the failure to identify a deficiency and ensure correction impacts the Emergency Preparedness cornerstone objective associated with the emergency response organization performance cornerstone attribute. The finding is a non-cited violation of 10 CFR 50.47(b)(14). The finding was evaluated using the Emergency Preparedness SDP and identified as having very low safety significance because it was a failure to comply with NRC requirements and was not a loss of the planning standard function because the classification deficiency was associated with a successful performance indicator opportunity. The Emergency Director declared the correct emergency classification within fifteen minutes of performing the dose assessment report using an emergency action level for which conditions currently existed, although this was not the first emergency action level that applied. This issue was entered into the CAP as PVAR 4365021. The finding was assigned a cross-cutting aspect of Low Threshold, because the licensee failed to completely and accurately recognize a performance deficiency [P.1.a] Inspection Report# : 2013002 (pdf) Page 5 of 7

4Q/2013 Inspection Findings - Palo Verde 3 Occupational Radiation Safety Significance: N/A Mar 31, 2013 Identified By: NRC Item Type: VIO Violation Failure to Maintain the Updated Final Safety Analysis Report for Radwaste Systems and Processes The inspectors identified a Severity Level IV violation of 10 CFR 50.71(e), Maintenance of Records, Making of Reports, with two examples for the failure to restore compliance within a reasonable time after a previous Severity Level IV non-cited violation of 10 CFR 50.71(e) was identified. The violation was identified because the licensee failed to periodically update the Updated Final Safety Analysis Report (UFSAR) with all changes made in the facility or procedures. Specifically, Example 1: From 1988 to 2013, the licensee did not update Chapter 11.2.2.3, Liquid Radwaste System, with a description of the temporary adsorption tanks and their use. The licensee has entered this violation into their corrective action program as PVAR 3075089. Example 2: From December 2003 to January 2013, the licensee made changes to the facility and procedures as described in the UFSAR, and performed safety analyses and evaluations in support of these changes, but failed to update the UFSAR to include these changes. Specifically, the licensee built the old steam generator storage facility used for long-term storage of radioactive waste (six replaced steam generators and three reactor vessel heads) on the owner controlled site until decommissioning. The licensee has entered this violation into their corrective action program as Condition Report (CR) 3398042 and PVAR 4330483. This violation is more than minor because the NRC relies on licensees to identify and report conditions or events meeting the criteria specified in the regulations in order to perform its regulatory function. Because this issue affected the NRCs ability to perform its regulatory function, it was evaluated using the traditional enforcement process. The issue was characterized as a Severity Level IV violation in accordance with Section 6.1.d.3 of the NRC Enforcement Policy because the erroneous information in the UFSAR was not used to make an unacceptable change to the facility or procedures. A cross-cutting aspect was not assigned because the violation was handled through traditional enforcement. Inspection Report# : 2013002 (pdf) Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Page 6 of 7

4Q/2013 Inspection Findings - Palo Verde 3 Miscellaneous Last modified : February 24, 2014 Page 7 of 7

1Q/2014 Inspection Findings - Palo Verde 3 Palo Verde 3 1Q/2014 Plant Inspection Findings Initiating Events Significance: Sep 30, 2013 Identified By: NRC Item Type: FIN Finding Failure to Include Requirements in Preventative Maintenance Basis The inspectors identified a Green finding for the failure of licensee personnel to follow Procedure 30DP-9MP08, Preventive Maintenance Program. Specifically, plant personnel did not ensure that requirements for performing inspection and replacement of degraded tie-wraps in electrical cubicles were contained in preventative maintenance basis documents. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to a catastrophic electrical fault on July 2, 2013. The licensee rebuilt the load center cubicle and has entered this issue into their corrective action program as PVAR 4454845. The failure to follow established procedures for updating preventive maintenance basis documents with requirements and recommendations from previous component failures was a performance deficiency. This performance deficiency is more than minor because it was associated with the procedure quality attribute of the Initiating Events Cornerstone and adversely affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, by not including the requirements and recommendations from the history of previous failures in the preventive maintenance basis, pertinent operating experience was not considered when evaluating changes to the preventive maintenance program. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to experiencing a catastrophic electrical fault on July 2, 2013 that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. The inspectors also determined the issue had a cross-cutting aspect in the area problem identification and resolution associated with the operating experience component because the licensee did not implement and institutionalize operating experience through changes to the stations preventive maintenance program [P.2(b)]. Inspection Report# : 2013004 (pdf) Significance: Jun 30, 2013 Identified By: Self-Revealing Item Type: FIN Finding Failure to Implement Corrective Action for Embedded Operator Work Around A self-revealing finding occurred because the licensee did not take action to correct an embedded operator work around in the condensate system. Specifically, the licensee did not evaluate and develop a plan to correct the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode. As a result, a malfunction of the heater drain tank B level controller resulted in a feedwater pump B trip and a subsequent reactor power cutback. The licensee entered the issue into their corrective action program as PVAR 4330504 and revised operating procedures to allow the condensate polishing demineralizer bypass valve controller to operate in automatic control mode during full power operations. Page 1 of 5

1Q/2014 Inspection Findings - Palo Verde 3 The failure to evaluate and determine corrective actions in accordance with established corrective action program procedures is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it was associated with the configuration control attribute of the Initiating Events Cornerstone and adversely affected the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, the practice of throttling the condensate polishing demineralizer bypass valve in manual control mode rather than automatic mode resulted in a reactor power cutback that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination (SDP) for Findings At-Power to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it only contributed to the likelihood of a reactor trip and not the likelihood that mitigation equipment or functions would not be available. This issue did not have a cross-cutting aspect associated with it because it is not indicative of current performance. Inspection Report# : 2013003 (pdf) Mitigating Systems Significance: Mar 28, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure To Provide Adequate Technical Justification For Operability of Containment Spray and Diesel Fuel Oil Systems The inspectors identified multiple examples of a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures used to perform operability determinations. Specifically, operations personnel failed to provide sufficient technical justification for the reasonable assurance of operability of a degraded condition involving one train of containment spray system and nonconforming conditions associated with diesel fuel oil piping. The inspectors concluded the failure of operations personnel to follow station procedures to perform operability determinations was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic process to make decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: FIN Finding Failure to Follow Station Process for Root Cause Evaluation Page 2 of 5

1Q/2014 Inspection Findings - Palo Verde 3 The inspectors identified a Green finding for the failure of station personnel to follow procedures to implement root cause evaluations. Specifically, approximately one third of the root cause evaluations reviewed by inspectors resulted in a probable cause with further information needed to validate the cause. Of this subset, eighty percent of the evaluations did not adhere to station processes. The failure of station personnel to follow station procedures to implement root cause evaluations was a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could become a more significant safety concern in that significant conditions adverse to quality could reoccur prior to the implementation of appropriate corrective action. The finding is associated with multiple cornerstones, though it is most closely associated with the Mitigating Systems Cornerstone and the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic approach when making decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Dec 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Modification of Safety Related Accumulators The inspectors identified a Green non-cited violation of 10 CFR 50, Appendix B, Criterion III, Design Control, for the failure to assure that a modification to the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components. Specifically, on September 4, 2009, the licensee failed to assess the suitability of a small dead band for a thermal relief valve in the accumulator valve manifold assembly and the impact on reliable operation of the associated valves. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4429273. The licensee isolated the thermal relief valve from the actuators. The failure to assure that the modification of the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components was a performance deficiency. The performance deficiency is more than minor, and therefore is a finding, because it was associated with the Mitigating Systems Cornerstone attribute of equipment performance and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources component because the licensee did not maintain design margins by minimizing long standing equipment issues. Inspection Report# : 2013005 (pdf) Page 3 of 5

1Q/2014 Inspection Findings - Palo Verde 3 Barrier Integrity Significance: Jun 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operability Determination Procedure for Maintaining Administrative Limits The inspectors identified a Green noncited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to perform operability determinations and functional assessments. Specifically, plant personnel did not maintain appropriate controls to ensure that the temperature limit established in the operability determination for the spent fuel pool criticality analysis was maintained. The licensee entered the issue into their corrective action program as PVAR 4380424, began taking more frequent readings of spent fuel pool temperature indicators, and lowered the spent fuel pool temperature alarm setpoint. The failure to follow Procedure 40DP-9OP26 for performing operability determinations is a performance deficiency. This performance deficiency is more than minor, and therefore a finding, because it is associated with the Barrier Integrity Cornerstone attribute of procedure quality and it adversely affected the cornerstone objective to provide reasonable assurance that physical design barriers protect the public from radionuclide releases caused by accident or events. The inspectors evaluated the significance of the finding using Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and IMC 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power. The inspectors reviewed all Barrier Integrity screening questions in IMC 0609, Appendix A, Exhibit 3 Section D, and all questions were answered No. Therefore, the finding was determined to be of very low safety significance. The inspectors determined that the finding has a cross-cutting aspect in the area of human performance associated with decision making. Specifically, the licensee did not communicate the administrative limits established in the spent fuel pool criticality operability determination to appropriate operations personnel [H.1(c)]. Inspection Report# : 2013003 (pdf) Emergency Preparedness Significance: Sep 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain an effective Emergency Plan for a Seismic Event The inspectors identified a non-cited violation of 10 CFR 50.54 (q)(2) for the failure to maintain an effective emergency plan action level scheme in accordance with 50.47(b)(4). Specifically, the Alert threshold for HA1.1, Natural or Destructive Phenomena Affecting VITAL AREAS, requires a declaration of an Alert for a seismic event greater than operating basis earthquake as indicated by any force balance accelerometer reading greater than 0.10g. Operators rely on alarms to verify the acceleration beyond the operating basis earthquake and the inspectors determined the seismic monitor alarm set point was 0.13g. This could result with the inability of operations personnel to classify an event at the Alert level. A design change modified the seismic monitoring set point to 0.1g and restored compliance. The licensee entered the issue into their corrective action program as Palo Verde Action Request 3624077. The inspectors determined that the failure to maintain an effective emergency action level scheme was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of Page 4 of 5

1Q/2014 Inspection Findings - Palo Verde 3 the public in the event of a radiological emergency. Specifically, the licensees ability to declare an Alert based on Natural Phenomenon at the correct threshold was degraded. The inspectors assessed the significance of the finding in accordance with NRC Inspection Manual Chapter (IMC) 0609, Appendix B, Emergency Preparedness Significance Determination Process, Figure 5.4-1, and determined the finding to be of very low safety significance because compensatory measures were available for emergency response organization personnel to perform the classification duties. The inspectors determined this finding is not indicative of current performance and therefore no cross-cutting aspect is assigned. Inspection Report# : 2013004 (pdf) Occupational Radiation Safety Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : May 30, 2014 Page 5 of 5

2Q/2014 Inspection Findings - Palo Verde 3 Palo Verde 3 2Q/2014 Plant Inspection Findings Initiating Events Significance: Sep 30, 2013 Identified By: NRC Item Type: FIN Finding Failure to Include Requirements in Preventative Maintenance Basis The inspectors identified a Green finding for the failure of licensee personnel to follow Procedure 30DP-9MP08, Preventive Maintenance Program. Specifically, plant personnel did not ensure that requirements for performing inspection and replacement of degraded tie-wraps in electrical cubicles were contained in preventative maintenance basis documents. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to a catastrophic electrical fault on July 2, 2013. The licensee rebuilt the load center cubicle and has entered this issue into their corrective action program as PVAR 4454845. The failure to follow established procedures for updating preventive maintenance basis documents with requirements and recommendations from previous component failures was a performance deficiency. This performance deficiency is more than minor because it was associated with the procedure quality attribute of the Initiating Events Cornerstone and adversely affects the cornerstone objective to limit the likelihood of those events that upset plant stability and challenge critical safety functions during shutdown as well as power operations. Specifically, by not including the requirements and recommendations from the history of previous failures in the preventive maintenance basis, pertinent operating experience was not considered when evaluating changes to the preventive maintenance program. Consequently, degraded cable tie-wraps in Unit 1 load center L02 were not inspected prior to experiencing a catastrophic electrical fault on July 2, 2013 that upset plant stability. The inspectors used the NRC Inspection Manual Chapter 0609, Attachment 4, "Phase 1 - Initial Screening and Characterization of Findings, to determine the significance. The inspectors determined that the finding was of very low safety significance (Green) because it did not contribute to both the likelihood of a reactor trip and the likelihood that mitigation equipment or functions would not be available. The inspectors also determined the issue had a cross-cutting aspect in the area problem identification and resolution associated with the operating experience component because the licensee did not implement and institutionalize operating experience through changes to the stations preventive maintenance program [P.2(b)]. Inspection Report# : 2013004 (pdf) Mitigating Systems Significance: Jun 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operator Challenges Procedure Green. The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures to ensure that appropriate contingency actions are entered in the operator challenge listing in the control room. Specifically, upon Page 1 of 8

2Q/2014 Inspection Findings - Palo Verde 3 discovery that the pressurizer master level controller could not be placed into manual mode on February 20, 2014, the licensee did not prescribe appropriate contingency actions for operation of the pressurizer level control system. As a result, on March 15, 2014, Unit 3 exceeded the pressurizer maximum level mandated by Technical Specification 3.4.9. The licensee subsequently replaced the faulty controller and has entered this issue in their corrective action program as Palo Verde Action Request 4540981. The failure of operations personnel to follow station procedures for identifying, documenting, and tracking operator challenges was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the configuration control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to document an operator work around in the pressurizer level control system allowed operators to place the system in a configuration that challenged the availability, reliability, and capability of the pressurizer to respond to reactor coolant system pressure transients. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance because the licensee did not challenge the uncertain condition of the pressurizer level controller. Specifically, after identifying the unexpected failure of the pressurizer level controller, operations personnel did not fully evaluate and manage the risks associated with the degraded condition before proceeding [H.11]. (Section 4OA2) Inspection Report# : 2014003 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Requirements for Establishing Operability of the Spray Pond System The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis, are correctly translated into specifications, drawings, procedures, and instructions. These measures shall include provisions to assure that appropriate quality standards are specified and included in design documents and that deviations from such standards are controlled. Specifically, prior to February 7, 2014, the licensee used Engineering Calculation 13-NS-C088, Mission Times for EW, SP, SI, AF, and DG systems, for establishing a 26-day mission time of the spray pond system instead of a 30-day availability time as required by Regulatory Guide 1.27, Ultimate Heat Sink For Nuclear Power Plants, and approved in their safety evaluation report. Consequently, spray pond system operability determinations performed per Procedure 40DP-9OP26, Operations PVAR Processing and Operability Determination/ Functional Assessment, used the incorrect mission time. In response to this issue, the licensee performed a review of the operability determinations in question using 30 days for the mission time and confirmed that the spray pond system remained operable and maintained an adequate safety margin. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500910. The team determined that the failure to ensure that design basis information associated with the mission time of the spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to use the correct mission time when determining operability was a significant deficiency of design control in that operability determination evaluations could establish nonconservative results that could lead to the spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, Page 2 of 8

2Q/2014 Inspection Findings - Palo Verde 3 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee implemented an engineering study with inaccurate information establishing the incorrect mission time used in operability determinations for the spray pond system. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Deficiencies in Emergency Diesel Generator Engine Room and Control Room Ventilation Air Flow Testing and Evaluation The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, which states, in part, A test program shall be established to assure that all testing required to demonstrate that structures, systems, and components will perform satisfactorily in service is identified and performed in accordance with written test procedures which incorporate the requirements and acceptance limits contained in applicable design documents. Specifically, in June, 2013, the licensee failed to evaluate performance test results when high air flow measurements from the emergency diesel generator engine room and control room ventilation air flow performance tests contained values that were beyond the capability of the equipment. Consequently, the condition of the higher measured airflow had not been evaluated to determine if the test results were valid. In response to this issue, the licensee confirmed that the equipment had remained operable, based on the review of more accurate testing performed in 2006. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500070. The team determined that the failure to establish and incorporate adequate air flow acceptance criteria into the emergency diesel generator control room supply fan and engine room exhaust fan performance tests was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to incorporate adequate acceptance criteria into the safety-related equipment performance tests was a significant deficiency of test control which could cause unacceptable fan performance conditions to go undetected. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee failed to use decision-making practices that emphasize prudent choices over those that are simply allowable. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish Adequate Procedures for an Alternate Source of Spray Pond Inventory The team identified a Green, non-cited violation of Technical Specification 5.4.1, which states, in part, Written procedures shall be established, implemented, and maintained covering the following activities: Part a. The applicable Page 3 of 8

2Q/2014 Inspection Findings - Palo Verde 3 procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 6 of Regulatory Guide 1.33, Appendix A, requires procedures for combating emergencies and other significant events. Specifically, prior to January 24, 2014, emergency procedures to provide make-up water to the essential spray pond beyond its 26 day water inventory did not provide sufficient details and contained inaccuracies for supplying the essential spray ponds with water from the regional aquifer via a well. In response to this issue, the licensee confirmed that there had never been an event at the site for which the procedure would have been utilized. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4496901, 4497291, 4498167, and 4499085. The team determined that the failure to establish adequate procedures for an alternate source of spray pond inventory was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Procedure Quality and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the continuous capability of the ultimate heat sink to perform its safety function beyond the 26-day inventory of the essential spray ponds was not ensured. In accordance with Inspection Manual Chapter 0609, Appendix A, Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. The team determined that this finding did not have a cross-cutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Improper Extension of Surveillance Interval for Surveillance Requirements Associated with the Engineered Safety Features Actuation Signal (ESFAS) Sequencer and Relays The team identified a Green, non-cited violation of Technical Specification 5.5.18, Surveillance Frequency Control Program which states, in part, This program provides controls for Surveillance Frequencies. The program shall ensure that Surveillance Requirements specified in the Technical Specifications are performed at intervals sufficient to assure the associated Limiting Conditions for Operation are met. Part (b) states, Changes of the Frequencies listed in the Surveillance Frequency Control Program shall be made in accordance with NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1. Specifically, prior to February 3, 2014, previous regulatory commitments for the engineered safety features actuation signal system surveillance test frequencies were not properly addressed as required by Technical Specification 5.5.18.b and NEI 04-10. The licensee did not follow the guidance of NEI 04-10 when they revised the Surveillance Frequency Control Program to test each train of the engineered safety features actuation signal system from every 18 months to every 36 months. In response to this issue, the licensee confirmed that the engineered safety features actuation signal system remained operable because the system had been tested satisfactory and none of the technical specification surveillances were overdue. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4500910 and 4500874. The team determined that the failure to adequately address a regulatory commitment when extending the surveillance testing frequency associated with the engineered safety features actuation signal system was a performance deficiency. This performance deficiency was more than minor because it was associated with the Mitigating Systems Cornerstone attribute of Equipment Performance, and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of the engineered safety features actuation signal system to respond to initiating events to Page 4 of 8

2Q/2014 Inspection Findings - Palo Verde 3 prevent undesirable consequences. Specifically, the NRC commitment identified in document RCTSAI 7673 committed the licensee to: the BOP ESFAS system will be fully tested at least every 18 months at the time of refueling. When making a change to the Surveillance Frequency Control Program associated with the surveillance test frequency of the engineered safety features actuation signal system, the licensee failed to collect and review all commitments made to the NRC as required by NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1, and failed to follow the requirements of NEI 99-04, Guidelines for Managing NRC Commitment Changes, Revision 0. In accordance with NRC Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee leaders did not use a systematic process for evaluating and implementing change so that nuclear safety remains the overriding priority. Inspection Report# : 2013009 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure To Provide Adequate Technical Justification For Operability of Containment Spray and Diesel Fuel Oil Systems The inspectors identified multiple examples of a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures used to perform operability determinations. Specifically, operations personnel failed to provide sufficient technical justification for the reasonable assurance of operability of a degraded condition involving one train of containment spray system and nonconforming conditions associated with diesel fuel oil piping. The inspectors concluded the failure of operations personnel to follow station procedures to perform operability determinations was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic process to make decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: FIN Finding Failure to Follow Station Process for Root Cause Evaluation The inspectors identified a Green finding for the failure of station personnel to follow procedures to implement root cause evaluations. Specifically, approximately one third of the root cause evaluations reviewed by inspectors resulted Page 5 of 8

2Q/2014 Inspection Findings - Palo Verde 3 in a probable cause with further information needed to validate the cause. Of this subset, eighty percent of the evaluations did not adhere to station processes. The failure of station personnel to follow station procedures to implement root cause evaluations was a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could become a more significant safety concern in that significant conditions adverse to quality could reoccur prior to the implementation of appropriate corrective action. The finding is associated with multiple cornerstones, though it is most closely associated with the Mitigating Systems Cornerstone and the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic approach when making decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Dec 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Modification of Safety Related Accumulators The inspectors identified a Green non-cited violation of 10 CFR 50, Appendix B, Criterion III, Design Control, for the failure to assure that a modification to the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components. Specifically, on September 4, 2009, the licensee failed to assess the suitability of a small dead band for a thermal relief valve in the accumulator valve manifold assembly and the impact on reliable operation of the associated valves. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4429273. The licensee isolated the thermal relief valve from the actuators. The failure to assure that the modification of the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components was a performance deficiency. The performance deficiency is more than minor, and therefore is a finding, because it was associated with the Mitigating Systems Cornerstone attribute of equipment performance and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources component because the licensee did not maintain design margins by minimizing long standing equipment issues. Inspection Report# : 2013005 (pdf) Page 6 of 8

2Q/2014 Inspection Findings - Palo Verde 3 Barrier Integrity Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Surveillance Testing Procedure The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between November 5, 2010 and September 17, 2012, the licensee failed to follow Procedure 73DP-9ZZ14, Surveillance Testing, Step 3.6.1, Failed Step or Out of Tolerance Data, which requires personnel to write a Palo Verde Action Request (PVAR) when a failed surveillance test is encountered. On three separate occasions, the licensee failed to initiate a Palo Verde action request when the containment air lock door seal surveillance test failed. In response to this issue, the licensee confirmed that minor maintenance had been performed on the containment air lock door seals immediately following the failure of the surveillances and the surveillances then met the procedure requirements. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4499119 and 4499123. The team determined that the failure to follow Procedure 73DP-9ZZ14, Surveillance Testing, which required maintenance personnel to write a Palo Verde action request upon the failure of a surveillance test, was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it would lead to a more significant safety concern. Specifically, by not initiating Palo Verde action requests for failed surveillances, the licensee missed the opportunity to enter the failures into their corrective action program, perform formal operability determinations, consider the conditions for identification of maintenance rule functional failures, identify performance trends, and ultimately, correct the adverse condition in a timely manner. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 3, Barrier Integrity Screening Questions, the issue screened as having very low safety significance (Green) because it did not represent an actual open pathway in the physical integrity of reactor containment and did not involve an actual reduction in function of hydrogen igniters in the reactor containment. This finding had a cross-cutting aspect in the area of human performance because licensee leaders failed to ensure that personnel, equipment, procedures, and other resources are available and adequate to support nuclear safety. Inspection Report# : 2013009 (pdf) Emergency Preparedness Significance: Sep 30, 2013 Identified By: NRC Item Type: NCV NonCited Violation Failure to Maintain an effective Emergency Plan for a Seismic Event The inspectors identified a non-cited violation of 10 CFR 50.54 (q)(2) for the failure to maintain an effective emergency plan action level scheme in accordance with 50.47(b)(4). Specifically, the Alert threshold for HA1.1, Natural or Destructive Phenomena Affecting VITAL AREAS, requires a declaration of an Alert for a seismic event greater than operating basis earthquake as indicated by any force balance accelerometer reading greater than 0.10g. Operators rely on alarms to verify the acceleration beyond the operating basis earthquake and the inspectors determined the seismic monitor alarm set point was 0.13g. This could result with the inability of operations personnel Page 7 of 8

2Q/2014 Inspection Findings - Palo Verde 3 to classify an event at the Alert level. A design change modified the seismic monitoring set point to 0.1g and restored compliance. The licensee entered the issue into their corrective action program as Palo Verde Action Request 3624077. The inspectors determined that the failure to maintain an effective emergency action level scheme was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the Emergency Response Organization Performance attribute of the Emergency Preparedness Cornerstone and its objective to ensure that the licensee is capable of implementing adequate measures to protect the health and safety of the public in the event of a radiological emergency. Specifically, the licensees ability to declare an Alert based on Natural Phenomenon at the correct threshold was degraded. The inspectors assessed the significance of the finding in accordance with NRC Inspection Manual Chapter (IMC) 0609, Appendix B, Emergency Preparedness Significance Determination Process, Figure 5.4-1, and determined the finding to be of very low safety significance because compensatory measures were available for emergency response organization personnel to perform the classification duties. The inspectors determined this finding is not indicative of current performance and therefore no cross-cutting aspect is assigned. Inspection Report# : 2013004 (pdf) Occupational Radiation Safety Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : August 29, 2014 Page 8 of 8

3Q/2014 Inspection Findings - Palo Verde 3 Palo Verde 3 3Q/2014 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. Specifically, after discovering that the turbine driven auxiliary feedwater pump exhaust line did not have any tornado missile protection, operators performed an immediate operability determination and declared the system operable. The inspectors challenged this evaluation and determined the licensee did not provide adequate technical justification for continued operation with this condition because: (1) the evaluation relied on a probabilistic risk assessment that assumed the turbine driven auxiliary feedwater pump fails due to impact from a tornado-born missile, and (2) the evaluation assumed that the results of a future analysis would provide satisfactory results. In response to the inspectors operability concerns, plant personnel subsequently completed an analysis that provided a reasonable expectation that the turbine driven auxiliary feedwater pump would be able to perform its safety function if impacted by a tornado-born missile. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4255816. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors performed the initial significance determination for the performance deficiency using NRC Inspection Manual 0609, Appendix A, Exhibit 4, External Events Screening Questions, dated July 1, 2012. The finding required a detailed risk evaluation because the turbine driven auxiliary feedwater pump is one train of a system that supports a risk significant function. Therefore, a Region IV senior reactor analyst performed a bounding detailed risk evaluation. The change to the core damage frequency was 7E-10/year (Green). The dominant core damage sequences included a tornado induced loss of offsite power initiating event, failure of the turbine driven auxiliary feedwater pump, and random failures of the motor driven auxiliary feedwater pumps. The low frequency for the tornado induced loss of offsite power initiating event helped to minimize the risk significance. The inspectors determined this finding has a cross-cutting aspect in the area of human because the licensee failed to utilize a conservative bias in its evaluation of the missing tornado missile protection, considering the risk significance of the turbine driven auxiliary feedwater pump and lack of any technical evaluation [H.14] (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Page 1 of 9

3Q/2014 Inspection Findings - Palo Verde 3 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Requirements for Establishing Operability of Spray Pond System Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure to correctly translate the mission time of the essential spray pond system into a procedure used to determine operability. In response to the inspectors concerns, the licensee re-evaluated essential spray pond operability determinations that had used the erroneous 26-day mission time and concluded that acceptable margin was available to ensure the system would remain operable for the 30-day mission time. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4550539. The failure to ensure that design basis information associated with the mission time of the essential spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, the failure to use the correct mission time when determining operability could establish nonconservative results that could lead to the essential spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding has a cross-cutting aspect in the area of human performance because the licensee failed to create and maintain complete, accurate, and up-to-date documentation. Specifically, after initially recognizing the adverse condition, the licensee did not document a standing order or temporary procedure change to prevent operability evaluations from using the incorrect essential spray pond mission time [H.7]. (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Component Design Basis Inspection Green. The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the licensees failure to assure the adequacy of degraded voltage relay setpoints. Specifically, the team identified that the licensee failed to perform calculations to demonstrate the voltage setpoints for the installed degraded voltage relays would afford adequate voltage to safety-related loads during worst case accident loading. The failure to assure the adequacy of degraded voltage relay setpoints for voltage and the time delay by performing adequate voltage drop calculations was a performance deficiency. This finding is more than minor because it was associated with the design control attribute of the Mitigating Systems cornerstone and it adversely impacted to the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Specifically, the failure to properly ensure that safety-related electrical devices had adequate voltage could impact their safety function. The basis for this conclusion was that despite the non-conservative voltage inputs to voltage calculations and, therefore, loss of design margin for available voltage, there was still adequate voltage for the circuits to perform their safety function based on worst case voltage as demonstrated in the updated calculations. The licensee developed design basis calculations for its DVR voltage setpoints and committed to addressing the technical basis and interim actions in a commitment letter for their corrective actions. There is no cross-cutting aspect associated with this finding because it is a historical condition and not indicative of current performance. (Section 1R21) Inspection Report# : 2014004 (pdf) Page 2 of 9

3Q/2014 Inspection Findings - Palo Verde 3 Significance: Jun 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operator Challenges Procedure Green. The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures to ensure that appropriate contingency actions are entered in the operator challenge listing in the control room. Specifically, upon discovery that the pressurizer master level controller could not be placed into manual mode on February 20, 2014, the licensee did not prescribe appropriate contingency actions for operation of the pressurizer level control system. As a result, on March 15, 2014, Unit 3 exceeded the pressurizer maximum level mandated by Technical Specification 3.4.9. The licensee subsequently replaced the faulty controller and has entered this issue in their corrective action program as Palo Verde Action Request 4540981. The failure of operations personnel to follow station procedures for identifying, documenting, and tracking operator challenges was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the configuration control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to document an operator work around in the pressurizer level control system allowed operators to place the system in a configuration that challenged the availability, reliability, and capability of the pressurizer to respond to reactor coolant system pressure transients. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance because the licensee did not challenge the uncertain condition of the pressurizer level controller. Specifically, after identifying the unexpected failure of the pressurizer level controller, operations personnel did not fully evaluate and manage the risks associated with the degraded condition before proceeding [H.11]. (Section 4OA2) Inspection Report# : 2014003 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Requirements for Establishing Operability of the Spray Pond System The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis, are correctly translated into specifications, drawings, procedures, and instructions. These measures shall include provisions to assure that appropriate quality standards are specified and included in design documents and that deviations from such standards are controlled. Specifically, prior to February 7, 2014, the licensee used Engineering Calculation 13-NS-C088, Mission Times for EW, SP, SI, AF, and DG systems, for establishing a 26-day mission time of the spray pond system instead of a 30-day availability time as required by Regulatory Guide 1.27, Ultimate Heat Sink For Nuclear Power Plants, and approved in their safety evaluation report. Consequently, spray pond system operability determinations performed per Procedure 40DP-9OP26, Operations PVAR Processing and Operability Determination/ Functional Assessment, used the incorrect mission time. In response to this issue, the licensee performed a review of the operability determinations in question using 30 days for the mission time and confirmed that the spray pond system remained operable and maintained an adequate safety margin. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500910. Page 3 of 9

3Q/2014 Inspection Findings - Palo Verde 3 The team determined that the failure to ensure that design basis information associated with the mission time of the spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to use the correct mission time when determining operability was a significant deficiency of design control in that operability determination evaluations could establish nonconservative results that could lead to the spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee implemented an engineering study with inaccurate information establishing the incorrect mission time used in operability determinations for the spray pond system. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Deficiencies in Emergency Diesel Generator Engine Room and Control Room Ventilation Air Flow Testing and Evaluation The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, which states, in part, A test program shall be established to assure that all testing required to demonstrate that structures, systems, and components will perform satisfactorily in service is identified and performed in accordance with written test procedures which incorporate the requirements and acceptance limits contained in applicable design documents. Specifically, in June, 2013, the licensee failed to evaluate performance test results when high air flow measurements from the emergency diesel generator engine room and control room ventilation air flow performance tests contained values that were beyond the capability of the equipment. Consequently, the condition of the higher measured airflow had not been evaluated to determine if the test results were valid. In response to this issue, the licensee confirmed that the equipment had remained operable, based on the review of more accurate testing performed in 2006. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500070. The team determined that the failure to establish and incorporate adequate air flow acceptance criteria into the emergency diesel generator control room supply fan and engine room exhaust fan performance tests was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to incorporate adequate acceptance criteria into the safety-related equipment performance tests was a significant deficiency of test control which could cause unacceptable fan performance conditions to go undetected. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee failed to use decision-making practices that emphasize prudent choices over those that are simply allowable. Page 4 of 9

3Q/2014 Inspection Findings - Palo Verde 3 Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish Adequate Procedures for an Alternate Source of Spray Pond Inventory The team identified a Green, non-cited violation of Technical Specification 5.4.1, which states, in part, Written procedures shall be established, implemented, and maintained covering the following activities: Part a. The applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 6 of Regulatory Guide 1.33, Appendix A, requires procedures for combating emergencies and other significant events. Specifically, prior to January 24, 2014, emergency procedures to provide make-up water to the essential spray pond beyond its 26 day water inventory did not provide sufficient details and contained inaccuracies for supplying the essential spray ponds with water from the regional aquifer via a well. In response to this issue, the licensee confirmed that there had never been an event at the site for which the procedure would have been utilized. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4496901, 4497291, 4498167, and 4499085. The team determined that the failure to establish adequate procedures for an alternate source of spray pond inventory was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Procedure Quality and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the continuous capability of the ultimate heat sink to perform its safety function beyond the 26-day inventory of the essential spray ponds was not ensured. In accordance with Inspection Manual Chapter 0609, Appendix A, Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. The team determined that this finding did not have a cross-cutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Improper Extension of Surveillance Interval for Surveillance Requirements Associated with the Engineered Safety Features Actuation Signal (ESFAS) Sequencer and Relays The team identified a Green, non-cited violation of Technical Specification 5.5.18, Surveillance Frequency Control Program which states, in part, This program provides controls for Surveillance Frequencies. The program shall ensure that Surveillance Requirements specified in the Technical Specifications are performed at intervals sufficient to assure the associated Limiting Conditions for Operation are met. Part (b) states, Changes of the Frequencies listed in the Surveillance Frequency Control Program shall be made in accordance with NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1. Specifically, prior to February 3, 2014, previous regulatory commitments for the engineered safety features actuation signal system surveillance test frequencies were not properly addressed as required by Technical Specification 5.5.18.b and NEI 04-10. The licensee did not follow the guidance of NEI 04-10 when they revised the Surveillance Frequency Control Program to test each train of the engineered safety features actuation signal system from every 18 months to every 36 months. In response to this issue, the licensee confirmed that the engineered safety features actuation signal system remained operable because the Page 5 of 9

3Q/2014 Inspection Findings - Palo Verde 3 system had been tested satisfactory and none of the technical specification surveillances were overdue. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4500910 and 4500874. The team determined that the failure to adequately address a regulatory commitment when extending the surveillance testing frequency associated with the engineered safety features actuation signal system was a performance deficiency. This performance deficiency was more than minor because it was associated with the Mitigating Systems Cornerstone attribute of Equipment Performance, and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of the engineered safety features actuation signal system to respond to initiating events to prevent undesirable consequences. Specifically, the NRC commitment identified in document RCTSAI 7673 committed the licensee to: the BOP ESFAS system will be fully tested at least every 18 months at the time of refueling. When making a change to the Surveillance Frequency Control Program associated with the surveillance test frequency of the engineered safety features actuation signal system, the licensee failed to collect and review all commitments made to the NRC as required by NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1, and failed to follow the requirements of NEI 99-04, Guidelines for Managing NRC Commitment Changes, Revision 0. In accordance with NRC Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee leaders did not use a systematic process for evaluating and implementing change so that nuclear safety remains the overriding priority. Inspection Report# : 2013009 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure To Provide Adequate Technical Justification For Operability of Containment Spray and Diesel Fuel Oil Systems The inspectors identified multiple examples of a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures used to perform operability determinations. Specifically, operations personnel failed to provide sufficient technical justification for the reasonable assurance of operability of a degraded condition involving one train of containment spray system and nonconforming conditions associated with diesel fuel oil piping. The inspectors concluded the failure of operations personnel to follow station procedures to perform operability determinations was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic process to make decisions (H.13). Page 6 of 9

3Q/2014 Inspection Findings - Palo Verde 3 Inspection Report# : 2014007 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: FIN Finding Failure to Follow Station Process for Root Cause Evaluation The inspectors identified a Green finding for the failure of station personnel to follow procedures to implement root cause evaluations. Specifically, approximately one third of the root cause evaluations reviewed by inspectors resulted in a probable cause with further information needed to validate the cause. Of this subset, eighty percent of the evaluations did not adhere to station processes. The failure of station personnel to follow station procedures to implement root cause evaluations was a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could become a more significant safety concern in that significant conditions adverse to quality could reoccur prior to the implementation of appropriate corrective action. The finding is associated with multiple cornerstones, though it is most closely associated with the Mitigating Systems Cornerstone and the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic approach when making decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Dec 31, 2013 Identified By: NRC Item Type: NCV NonCited Violation Inadequate Modification of Safety Related Accumulators The inspectors identified a Green non-cited violation of 10 CFR 50, Appendix B, Criterion III, Design Control, for the failure to assure that a modification to the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components. Specifically, on September 4, 2009, the licensee failed to assess the suitability of a small dead band for a thermal relief valve in the accumulator valve manifold assembly and the impact on reliable operation of the associated valves. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4429273. The licensee isolated the thermal relief valve from the actuators. The failure to assure that the modification of the main steam and main feedwater isolation valve accumulators was suitable for the reliable operation of these components was a performance deficiency. The performance deficiency is more than minor, and therefore is a finding, because it was associated with the Mitigating Systems Cornerstone attribute of equipment performance and adversely affects the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609 Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very Page 7 of 9

3Q/2014 Inspection Findings - Palo Verde 3 low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance associated with resources component because the licensee did not maintain design margins by minimizing long standing equipment issues. Inspection Report# : 2013005 (pdf) Barrier Integrity Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Surveillance Testing Procedure The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between November 5, 2010 and September 17, 2012, the licensee failed to follow Procedure 73DP-9ZZ14, Surveillance Testing, Step 3.6.1, Failed Step or Out of Tolerance Data, which requires personnel to write a Palo Verde Action Request (PVAR) when a failed surveillance test is encountered. On three separate occasions, the licensee failed to initiate a Palo Verde action request when the containment air lock door seal surveillance test failed. In response to this issue, the licensee confirmed that minor maintenance had been performed on the containment air lock door seals immediately following the failure of the surveillances and the surveillances then met the procedure requirements. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4499119 and 4499123. The team determined that the failure to follow Procedure 73DP-9ZZ14, Surveillance Testing, which required maintenance personnel to write a Palo Verde action request upon the failure of a surveillance test, was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it would lead to a more significant safety concern. Specifically, by not initiating Palo Verde action requests for failed surveillances, the licensee missed the opportunity to enter the failures into their corrective action program, perform formal operability determinations, consider the conditions for identification of maintenance rule functional failures, identify performance trends, and ultimately, correct the adverse condition in a timely manner. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 3, Barrier Integrity Screening Questions, the issue screened as having very low safety significance (Green) because it did not represent an actual open pathway in the physical integrity of reactor containment and did not involve an actual reduction in function of hydrogen igniters in the reactor containment. This finding had a cross-cutting aspect in the area of human performance because licensee leaders failed to ensure that personnel, equipment, procedures, and other resources are available and adequate to support nuclear safety. Inspection Report# : 2013009 (pdf) Emergency Preparedness Page 8 of 9

3Q/2014 Inspection Findings - Palo Verde 3 Occupational Radiation Safety Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : November 26, 2014 Page 9 of 9

4Q/2014 Inspection Findings - Palo Verde 3 Palo Verde 3 4Q/2014 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2014 Identified By: Self-Revealing Item Type: NCV NonCited Violation Failure to Verify the Adequacy of the Design of the Diesel Fuel Oil Cooler Green. The inspectors reviewed a self-revealing Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control for the stations failure to adequately review the suitability of materials of the diesel fuel oil cooler. Specifically, the Unit 2 A diesel generator fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. This corrosion ultimately affected the structural integrity of the cooler which rendered the A essential spray pond inoperable. In response to this, the licensee has replaced all six of the fuel oil cooler covers and initiated a design change to remove the fuel oil cooler from service. The licensee has entered the issue into the corrective action program as Condition Report Disposition Request 4543394. The failure to verify the adequacy of the design of the diesel fuel oil cooler was a performance deficiency. The performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone to ensure the availability, reliability, capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the Unit 2 A diesel fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. The corrosion ultimately affected the structural integrity of the cooler which rendered the Unit 2 A spray pond inoperable. In accordance with NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions. The finding screened to a detailed risk evaluation because it involved a potential loss of one train of safety related equipment for longer than the technical specification allowed outage time. A Region IV senior reactor analyst performed the detailed risk evaluation. The change to the core damage frequency was 1.5E-7/year (Green). The dominant core damage sequences included loss of offsite power events that lead to station blackout conditions. The gas turbine generators and the auxiliary feedwater system helped to minimize the risk. The inspectors determined this finding has no cross-cutting aspect because it is not indicative of current performance. Inspection Report# : 2014005 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Provide Adequate Technical Justification for Operability Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. Specifically, after discovering that the turbine driven auxiliary feedwater pump exhaust line did not have any tornado missile protection, operators performed an immediate operability determination and declared the system Page 1 of 9

4Q/2014 Inspection Findings - Palo Verde 3 operable. The inspectors challenged this evaluation and determined the licensee did not provide adequate technical justification for continued operation with this condition because: (1) the evaluation relied on a probabilistic risk assessment that assumed the turbine driven auxiliary feedwater pump fails due to impact from a tornado-born missile, and (2) the evaluation assumed that the results of a future analysis would provide satisfactory results. In response to the inspectors operability concerns, plant personnel subsequently completed an analysis that provided a reasonable expectation that the turbine driven auxiliary feedwater pump would be able to perform its safety function if impacted by a tornado-born missile. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4255816. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors performed the initial significance determination for the performance deficiency using NRC Inspection Manual 0609, Appendix A, Exhibit 4, External Events Screening Questions, dated July 1, 2012. The finding required a detailed risk evaluation because the turbine driven auxiliary feedwater pump is one train of a system that supports a risk significant function. Therefore, a Region IV senior reactor analyst performed a bounding detailed risk evaluation. The change to the core damage frequency was 7E-10/year (Green). The dominant core damage sequences included a tornado induced loss of offsite power initiating event, failure of the turbine driven auxiliary feedwater pump, and random failures of the motor driven auxiliary feedwater pumps. The low frequency for the tornado induced loss of offsite power initiating event helped to minimize the risk significance. The inspectors determined this finding has a cross-cutting aspect in the area of human because the licensee failed to utilize a conservative bias in its evaluation of the missing tornado missile protection, considering the risk significance of the turbine driven auxiliary feedwater pump and lack of any technical evaluation [H.14] (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Requirements for Establishing Operability of Spray Pond System Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure to correctly translate the mission time of the essential spray pond system into a procedure used to determine operability. In response to the inspectors concerns, the licensee re-evaluated essential spray pond operability determinations that had used the erroneous 26-day mission time and concluded that acceptable margin was available to ensure the system would remain operable for the 30-day mission time. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4550539. The failure to ensure that design basis information associated with the mission time of the essential spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, the failure to use the correct mission time when determining operability could establish nonconservative results that could lead to the essential spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding has a cross-cutting aspect in the area of human performance because the licensee failed to create and maintain complete, accurate, and Page 2 of 9

4Q/2014 Inspection Findings - Palo Verde 3 up-to-date documentation. Specifically, after initially recognizing the adverse condition, the licensee did not document a standing order or temporary procedure change to prevent operability evaluations from using the incorrect essential spray pond mission time [H.7]. (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Component Design Basis Inspection Green. The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the licensees failure to assure the adequacy of degraded voltage relay setpoints. Specifically, the team identified that the licensee failed to perform calculations to demonstrate the voltage setpoints for the installed degraded voltage relays would afford adequate voltage to safety-related loads during worst case accident loading. The failure to assure the adequacy of degraded voltage relay setpoints for voltage and the time delay by performing adequate voltage drop calculations was a performance deficiency. This finding is more than minor because it was associated with the design control attribute of the Mitigating Systems cornerstone and it adversely impacted to the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Specifically, the failure to properly ensure that safety-related electrical devices had adequate voltage could impact their safety function. The basis for this conclusion was that despite the non-conservative voltage inputs to voltage calculations and, therefore, loss of design margin for available voltage, there was still adequate voltage for the circuits to perform their safety function based on worst case voltage as demonstrated in the updated calculations. The licensee developed design basis calculations for its DVR voltage setpoints and committed to addressing the technical basis and interim actions in a commitment letter for their corrective actions. There is no cross-cutting aspect associated with this finding because it is a historical condition and not indicative of current performance. (Section 1R21) Inspection Report# : 2014004 (pdf) Significance: Jun 30, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Operator Challenges Procedure Green. The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures to ensure that appropriate contingency actions are entered in the operator challenge listing in the control room. Specifically, upon discovery that the pressurizer master level controller could not be placed into manual mode on February 20, 2014, the licensee did not prescribe appropriate contingency actions for operation of the pressurizer level control system. As a result, on March 15, 2014, Unit 3 exceeded the pressurizer maximum level mandated by Technical Specification 3.4.9. The licensee subsequently replaced the faulty controller and has entered this issue in their corrective action program as Palo Verde Action Request 4540981. The failure of operations personnel to follow station procedures for identifying, documenting, and tracking operator challenges was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the configuration control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to document an operator work around in the pressurizer level control system allowed operators to place the system in a configuration that challenged the availability, reliability, and capability of the pressurizer to respond to reactor coolant system pressure transients. The Page 3 of 9

4Q/2014 Inspection Findings - Palo Verde 3 inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance because the licensee did not challenge the uncertain condition of the pressurizer level controller. Specifically, after identifying the unexpected failure of the pressurizer level controller, operations personnel did not fully evaluate and manage the risks associated with the degraded condition before proceeding [H.11]. (Section 4OA2) Inspection Report# : 2014003 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Translate Design Basis Requirements for Establishing Operability of the Spray Pond System The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis, are correctly translated into specifications, drawings, procedures, and instructions. These measures shall include provisions to assure that appropriate quality standards are specified and included in design documents and that deviations from such standards are controlled. Specifically, prior to February 7, 2014, the licensee used Engineering Calculation 13-NS-C088, Mission Times for EW, SP, SI, AF, and DG systems, for establishing a 26-day mission time of the spray pond system instead of a 30-day availability time as required by Regulatory Guide 1.27, Ultimate Heat Sink For Nuclear Power Plants, and approved in their safety evaluation report. Consequently, spray pond system operability determinations performed per Procedure 40DP-9OP26, Operations PVAR Processing and Operability Determination/ Functional Assessment, used the incorrect mission time. In response to this issue, the licensee performed a review of the operability determinations in question using 30 days for the mission time and confirmed that the spray pond system remained operable and maintained an adequate safety margin. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500910. The team determined that the failure to ensure that design basis information associated with the mission time of the spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to use the correct mission time when determining operability was a significant deficiency of design control in that operability determination evaluations could establish nonconservative results that could lead to the spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee implemented an engineering study with inaccurate information establishing the incorrect mission time used in operability determinations for the spray pond system. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Page 4 of 9

4Q/2014 Inspection Findings - Palo Verde 3 Deficiencies in Emergency Diesel Generator Engine Room and Control Room Ventilation Air Flow Testing and Evaluation The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, which states, in part, A test program shall be established to assure that all testing required to demonstrate that structures, systems, and components will perform satisfactorily in service is identified and performed in accordance with written test procedures which incorporate the requirements and acceptance limits contained in applicable design documents. Specifically, in June, 2013, the licensee failed to evaluate performance test results when high air flow measurements from the emergency diesel generator engine room and control room ventilation air flow performance tests contained values that were beyond the capability of the equipment. Consequently, the condition of the higher measured airflow had not been evaluated to determine if the test results were valid. In response to this issue, the licensee confirmed that the equipment had remained operable, based on the review of more accurate testing performed in 2006. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500070. The team determined that the failure to establish and incorporate adequate air flow acceptance criteria into the emergency diesel generator control room supply fan and engine room exhaust fan performance tests was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to incorporate adequate acceptance criteria into the safety-related equipment performance tests was a significant deficiency of test control which could cause unacceptable fan performance conditions to go undetected. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee failed to use decision-making practices that emphasize prudent choices over those that are simply allowable. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Establish Adequate Procedures for an Alternate Source of Spray Pond Inventory The team identified a Green, non-cited violation of Technical Specification 5.4.1, which states, in part, Written procedures shall be established, implemented, and maintained covering the following activities: Part a. The applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 6 of Regulatory Guide 1.33, Appendix A, requires procedures for combating emergencies and other significant events. Specifically, prior to January 24, 2014, emergency procedures to provide make-up water to the essential spray pond beyond its 26 day water inventory did not provide sufficient details and contained inaccuracies for supplying the essential spray ponds with water from the regional aquifer via a well. In response to this issue, the licensee confirmed that there had never been an event at the site for which the procedure would have been utilized. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4496901, 4497291, 4498167, and 4499085. The team determined that the failure to establish adequate procedures for an alternate source of spray pond inventory was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Procedure Quality and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable Page 5 of 9

4Q/2014 Inspection Findings - Palo Verde 3 consequences. Specifically, the continuous capability of the ultimate heat sink to perform its safety function beyond the 26-day inventory of the essential spray ponds was not ensured. In accordance with Inspection Manual Chapter 0609, Appendix A, Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. The team determined that this finding did not have a cross-cutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Improper Extension of Surveillance Interval for Surveillance Requirements Associated with the Engineered Safety Features Actuation Signal (ESFAS) Sequencer and Relays The team identified a Green, non-cited violation of Technical Specification 5.5.18, Surveillance Frequency Control Program which states, in part, This program provides controls for Surveillance Frequencies. The program shall ensure that Surveillance Requirements specified in the Technical Specifications are performed at intervals sufficient to assure the associated Limiting Conditions for Operation are met. Part (b) states, Changes of the Frequencies listed in the Surveillance Frequency Control Program shall be made in accordance with NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1. Specifically, prior to February 3, 2014, previous regulatory commitments for the engineered safety features actuation signal system surveillance test frequencies were not properly addressed as required by Technical Specification 5.5.18.b and NEI 04-10. The licensee did not follow the guidance of NEI 04-10 when they revised the Surveillance Frequency Control Program to test each train of the engineered safety features actuation signal system from every 18 months to every 36 months. In response to this issue, the licensee confirmed that the engineered safety features actuation signal system remained operable because the system had been tested satisfactory and none of the technical specification surveillances were overdue. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4500910 and 4500874. The team determined that the failure to adequately address a regulatory commitment when extending the surveillance testing frequency associated with the engineered safety features actuation signal system was a performance deficiency. This performance deficiency was more than minor because it was associated with the Mitigating Systems Cornerstone attribute of Equipment Performance, and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of the engineered safety features actuation signal system to respond to initiating events to prevent undesirable consequences. Specifically, the NRC commitment identified in document RCTSAI 7673 committed the licensee to: the BOP ESFAS system will be fully tested at least every 18 months at the time of refueling. When making a change to the Surveillance Frequency Control Program associated with the surveillance test frequency of the engineered safety features actuation signal system, the licensee failed to collect and review all commitments made to the NRC as required by NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1, and failed to follow the requirements of NEI 99-04, Guidelines for Managing NRC Commitment Changes, Revision 0. In accordance with NRC Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human Page 6 of 9

4Q/2014 Inspection Findings - Palo Verde 3 performance because the licensee leaders did not use a systematic process for evaluating and implementing change so that nuclear safety remains the overriding priority. Inspection Report# : 2013009 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure To Provide Adequate Technical Justification For Operability of Containment Spray and Diesel Fuel Oil Systems The inspectors identified multiple examples of a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures used to perform operability determinations. Specifically, operations personnel failed to provide sufficient technical justification for the reasonable assurance of operability of a degraded condition involving one train of containment spray system and nonconforming conditions associated with diesel fuel oil piping. The inspectors concluded the failure of operations personnel to follow station procedures to perform operability determinations was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the equipment performance attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic process to make decisions (H.13). Inspection Report# : 2014007 (pdf) Significance: Mar 28, 2014 Identified By: NRC Item Type: FIN Finding Failure to Follow Station Process for Root Cause Evaluation The inspectors identified a Green finding for the failure of station personnel to follow procedures to implement root cause evaluations. Specifically, approximately one third of the root cause evaluations reviewed by inspectors resulted in a probable cause with further information needed to validate the cause. Of this subset, eighty percent of the evaluations did not adhere to station processes. The failure of station personnel to follow station procedures to implement root cause evaluations was a performance deficiency. The performance deficiency was more than minor, therefore a finding, because if left uncorrected the performance deficiency could become a more significant safety concern in that significant conditions adverse to quality could reoccur prior to the implementation of appropriate corrective action. The finding is associated with multiple cornerstones, though it is most closely associated with the Mitigating Systems Cornerstone and the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the Page 7 of 9

4Q/2014 Inspection Findings - Palo Verde 3 negative. The inspectors determined that the finding had a consistent process cross-cutting aspect in the area of human performance because the licensee did not use a consistent and systematic approach when making decisions (H.13). Inspection Report# : 2014007 (pdf) Barrier Integrity Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV NonCited Violation Failure to Follow Surveillance Testing Procedure The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between November 5, 2010 and September 17, 2012, the licensee failed to follow Procedure 73DP-9ZZ14, Surveillance Testing, Step 3.6.1, Failed Step or Out of Tolerance Data, which requires personnel to write a Palo Verde Action Request (PVAR) when a failed surveillance test is encountered. On three separate occasions, the licensee failed to initiate a Palo Verde action request when the containment air lock door seal surveillance test failed. In response to this issue, the licensee confirmed that minor maintenance had been performed on the containment air lock door seals immediately following the failure of the surveillances and the surveillances then met the procedure requirements. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4499119 and 4499123. The team determined that the failure to follow Procedure 73DP-9ZZ14, Surveillance Testing, which required maintenance personnel to write a Palo Verde action request upon the failure of a surveillance test, was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it would lead to a more significant safety concern. Specifically, by not initiating Palo Verde action requests for failed surveillances, the licensee missed the opportunity to enter the failures into their corrective action program, perform formal operability determinations, consider the conditions for identification of maintenance rule functional failures, identify performance trends, and ultimately, correct the adverse condition in a timely manner. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 3, Barrier Integrity Screening Questions, the issue screened as having very low safety significance (Green) because it did not represent an actual open pathway in the physical integrity of reactor containment and did not involve an actual reduction in function of hydrogen igniters in the reactor containment. This finding had a cross-cutting aspect in the area of human performance because licensee leaders failed to ensure that personnel, equipment, procedures, and other resources are available and adequate to support nuclear safety. Inspection Report# : 2013009 (pdf) Emergency Preparedness Occupational Radiation Safety Page 8 of 9

4Q/2014 Inspection Findings - Palo Verde 3 Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : February 26, 2015 Page 9 of 9

1Q/2015 Inspection Findings - Palo Verde 3 Palo Verde 3 1Q/2015 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2014 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to Verify the Adequacy of the Design of the Diesel Fuel Oil Cooler Green. The inspectors reviewed a self-revealing Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control for the stations failure to adequately review the suitability of materials of the diesel fuel oil cooler. Specifically, the Unit 2 A diesel generator fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. This corrosion ultimately affected the structural integrity of the cooler which rendered the A essential spray pond inoperable. In response to this, the licensee has replaced all six of the fuel oil cooler covers and initiated a design change to remove the fuel oil cooler from service. The licensee has entered the issue into the corrective action program as Condition Report Disposition Request 4543394. The failure to verify the adequacy of the design of the diesel fuel oil cooler was a performance deficiency. The performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone to ensure the availability, reliability, capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the Unit 2 A diesel fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. The corrosion ultimately affected the structural integrity of the cooler which rendered the Unit 2 A spray pond inoperable. In accordance with NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions. The finding screened to a detailed risk evaluation because it involved a potential loss of one train of safety related equipment for longer than the technical specification allowed outage time. A Region IV senior reactor analyst performed the detailed risk evaluation. The change to the core damage frequency was 1.5E-7/year (Green). The dominant core damage sequences included loss of offsite power events that lead to station blackout conditions. The gas turbine generators and the auxiliary feedwater system helped to minimize the risk. The inspectors determined this finding has no cross-cutting aspect because it is not indicative of current performance. Inspection Report# : 2014005 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Provide Adequate Technical Justification for Operability Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. Specifically, after discovering that the turbine driven auxiliary feedwater pump exhaust line did not have any tornado missile protection, operators performed an immediate operability determination and declared the system Page 1 of 8

1Q/2015 Inspection Findings - Palo Verde 3 operable. The inspectors challenged this evaluation and determined the licensee did not provide adequate technical justification for continued operation with this condition because: (1) the evaluation relied on a probabilistic risk assessment that assumed the turbine driven auxiliary feedwater pump fails due to impact from a tornado-born missile, and (2) the evaluation assumed that the results of a future analysis would provide satisfactory results. In response to the inspectors operability concerns, plant personnel subsequently completed an analysis that provided a reasonable expectation that the turbine driven auxiliary feedwater pump would be able to perform its safety function if impacted by a tornado-born missile. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4255816. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors performed the initial significance determination for the performance deficiency using NRC Inspection Manual 0609, Appendix A, Exhibit 4, External Events Screening Questions, dated July 1, 2012. The finding required a detailed risk evaluation because the turbine driven auxiliary feedwater pump is one train of a system that supports a risk significant function. Therefore, a Region IV senior reactor analyst performed a bounding detailed risk evaluation. The change to the core damage frequency was 7E-10/year (Green). The dominant core damage sequences included a tornado induced loss of offsite power initiating event, failure of the turbine driven auxiliary feedwater pump, and random failures of the motor driven auxiliary feedwater pumps. The low frequency for the tornado induced loss of offsite power initiating event helped to minimize the risk significance. The inspectors determined this finding has a cross-cutting aspect in the area of human because the licensee failed to utilize a conservative bias in its evaluation of the missing tornado missile protection, considering the risk significance of the turbine driven auxiliary feedwater pump and lack of any technical evaluation [H.14] (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Translate Design Basis Requirements for Establishing Operability of Spray Pond System Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure to correctly translate the mission time of the essential spray pond system into a procedure used to determine operability. In response to the inspectors concerns, the licensee re-evaluated essential spray pond operability determinations that had used the erroneous 26-day mission time and concluded that acceptable margin was available to ensure the system would remain operable for the 30-day mission time. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4550539. The failure to ensure that design basis information associated with the mission time of the essential spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, the failure to use the correct mission time when determining operability could establish nonconservative results that could lead to the essential spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding has a cross-cutting aspect in the area of human performance because the licensee failed to create and maintain complete, accurate, and Page 2 of 8

1Q/2015 Inspection Findings - Palo Verde 3 up-to-date documentation. Specifically, after initially recognizing the adverse condition, the licensee did not document a standing order or temporary procedure change to prevent operability evaluations from using the incorrect essential spray pond mission time [H.7]. (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Component Design Basis Inspection Green. The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the licensees failure to assure the adequacy of degraded voltage relay setpoints. Specifically, the team identified that the licensee failed to perform calculations to demonstrate the voltage setpoints for the installed degraded voltage relays would afford adequate voltage to safety-related loads during worst case accident loading. The failure to assure the adequacy of degraded voltage relay setpoints for voltage and the time delay by performing adequate voltage drop calculations was a performance deficiency. This finding is more than minor because it was associated with the design control attribute of the Mitigating Systems cornerstone and it adversely impacted to the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Specifically, the failure to properly ensure that safety-related electrical devices had adequate voltage could impact their safety function. The basis for this conclusion was that despite the non-conservative voltage inputs to voltage calculations and, therefore, loss of design margin for available voltage, there was still adequate voltage for the circuits to perform their safety function based on worst case voltage as demonstrated in the updated calculations. The licensee developed design basis calculations for its DVR voltage setpoints and committed to addressing the technical basis and interim actions in a commitment letter for their corrective actions. There is no cross-cutting aspect associated with this finding because it is a historical condition and not indicative of current performance. (Section 1R21) Inspection Report# : 2014004 (pdf) Significance: Jun 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Follow Operator Challenges Procedure Green. The inspectors identified a non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations personnel to follow station procedures to ensure that appropriate contingency actions are entered in the operator challenge listing in the control room. Specifically, upon discovery that the pressurizer master level controller could not be placed into manual mode on February 20, 2014, the licensee did not prescribe appropriate contingency actions for operation of the pressurizer level control system. As a result, on March 15, 2014, Unit 3 exceeded the pressurizer maximum level mandated by Technical Specification 3.4.9. The licensee subsequently replaced the faulty controller and has entered this issue in their corrective action program as Palo Verde Action Request 4540981. The failure of operations personnel to follow station procedures for identifying, documenting, and tracking operator challenges was a performance deficiency. The performance deficiency was more than minor, and therefore a finding, because it adversely affected the configuration control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to document an operator work around in the pressurizer level control system allowed operators to place the system in a configuration that challenged the availability, reliability, and capability of the pressurizer to respond to reactor coolant system pressure transients. The Page 3 of 8

1Q/2015 Inspection Findings - Palo Verde 3 inspectors evaluated the significance of the issue under the Significance Determination Process, as defined in Inspection Manual Chapter 0609.04, Initial Characterization of Findings, and Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings at-Power. The inspectors concluded the finding was of very low safety significance (Green) because all questions in Exhibit 2 could be answered in the negative. The inspectors determined that the finding had a cross-cutting aspect in the area of human performance because the licensee did not challenge the uncertain condition of the pressurizer level controller. Specifically, after identifying the unexpected failure of the pressurizer level controller, operations personnel did not fully evaluate and manage the risks associated with the degraded condition before proceeding [H.11]. (Section 4OA2) Inspection Report# : 2014003 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Translate Design Basis Requirements for Establishing Operability of the Spray Pond System The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis, are correctly translated into specifications, drawings, procedures, and instructions. These measures shall include provisions to assure that appropriate quality standards are specified and included in design documents and that deviations from such standards are controlled. Specifically, prior to February 7, 2014, the licensee used Engineering Calculation 13-NS-C088, Mission Times for EW, SP, SI, AF, and DG systems, for establishing a 26-day mission time of the spray pond system instead of a 30-day availability time as required by Regulatory Guide 1.27, Ultimate Heat Sink For Nuclear Power Plants, and approved in their safety evaluation report. Consequently, spray pond system operability determinations performed per Procedure 40DP-9OP26, Operations PVAR Processing and Operability Determination/ Functional Assessment, used the incorrect mission time. In response to this issue, the licensee performed a review of the operability determinations in question using 30 days for the mission time and confirmed that the spray pond system remained operable and maintained an adequate safety margin. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500910. The team determined that the failure to ensure that design basis information associated with the mission time of the spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to use the correct mission time when determining operability was a significant deficiency of design control in that operability determination evaluations could establish nonconservative results that could lead to the spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee implemented an engineering study with inaccurate information establishing the incorrect mission time used in operability determinations for the spray pond system. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Page 4 of 8

1Q/2015 Inspection Findings - Palo Verde 3 Deficiencies in Emergency Diesel Generator Engine Room and Control Room Ventilation Air Flow Testing and Evaluation The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion XI, Test Control, which states, in part, A test program shall be established to assure that all testing required to demonstrate that structures, systems, and components will perform satisfactorily in service is identified and performed in accordance with written test procedures which incorporate the requirements and acceptance limits contained in applicable design documents. Specifically, in June, 2013, the licensee failed to evaluate performance test results when high air flow measurements from the emergency diesel generator engine room and control room ventilation air flow performance tests contained values that were beyond the capability of the equipment. Consequently, the condition of the higher measured airflow had not been evaluated to determine if the test results were valid. In response to this issue, the licensee confirmed that the equipment had remained operable, based on the review of more accurate testing performed in 2006. This finding was entered into the licensees corrective action program as Palo Verde Action Request (PVAR) 4500070. The team determined that the failure to establish and incorporate adequate air flow acceptance criteria into the emergency diesel generator control room supply fan and engine room exhaust fan performance tests was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Equipment Performance and affected the cornerstone objective to ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to incorporate adequate acceptance criteria into the safety-related equipment performance tests was a significant deficiency of test control which could cause unacceptable fan performance conditions to go undetected. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human performance because the licensee failed to use decision-making practices that emphasize prudent choices over those that are simply allowable. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Establish Adequate Procedures for an Alternate Source of Spray Pond Inventory The team identified a Green, non-cited violation of Technical Specification 5.4.1, which states, in part, Written procedures shall be established, implemented, and maintained covering the following activities: Part a. The applicable procedures recommended in Regulatory Guide 1.33, Revision 2, Appendix A, February 1978. Section 6 of Regulatory Guide 1.33, Appendix A, requires procedures for combating emergencies and other significant events. Specifically, prior to January 24, 2014, emergency procedures to provide make-up water to the essential spray pond beyond its 26 day water inventory did not provide sufficient details and contained inaccuracies for supplying the essential spray ponds with water from the regional aquifer via a well. In response to this issue, the licensee confirmed that there had never been an event at the site for which the procedure would have been utilized. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4496901, 4497291, 4498167, and 4499085. The team determined that the failure to establish adequate procedures for an alternate source of spray pond inventory was a performance deficiency. This performance deficiency was more than minor because it adversely affected the Mitigating Systems Cornerstone attribute of Procedure Quality and affected the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable Page 5 of 8

1Q/2015 Inspection Findings - Palo Verde 3 consequences. Specifically, the continuous capability of the ultimate heat sink to perform its safety function beyond the 26-day inventory of the essential spray ponds was not ensured. In accordance with Inspection Manual Chapter 0609, Appendix A, Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. The team determined that this finding did not have a cross-cutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2013009 (pdf) Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Improper Extension of Surveillance Interval for Surveillance Requirements Associated with the Engineered Safety Features Actuation Signal (ESFAS) Sequencer and Relays The team identified a Green, non-cited violation of Technical Specification 5.5.18, Surveillance Frequency Control Program which states, in part, This program provides controls for Surveillance Frequencies. The program shall ensure that Surveillance Requirements specified in the Technical Specifications are performed at intervals sufficient to assure the associated Limiting Conditions for Operation are met. Part (b) states, Changes of the Frequencies listed in the Surveillance Frequency Control Program shall be made in accordance with NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1. Specifically, prior to February 3, 2014, previous regulatory commitments for the engineered safety features actuation signal system surveillance test frequencies were not properly addressed as required by Technical Specification 5.5.18.b and NEI 04-10. The licensee did not follow the guidance of NEI 04-10 when they revised the Surveillance Frequency Control Program to test each train of the engineered safety features actuation signal system from every 18 months to every 36 months. In response to this issue, the licensee confirmed that the engineered safety features actuation signal system remained operable because the system had been tested satisfactory and none of the technical specification surveillances were overdue. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4500910 and 4500874. The team determined that the failure to adequately address a regulatory commitment when extending the surveillance testing frequency associated with the engineered safety features actuation signal system was a performance deficiency. This performance deficiency was more than minor because it was associated with the Mitigating Systems Cornerstone attribute of Equipment Performance, and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of the engineered safety features actuation signal system to respond to initiating events to prevent undesirable consequences. Specifically, the NRC commitment identified in document RCTSAI 7673 committed the licensee to: the BOP ESFAS system will be fully tested at least every 18 months at the time of refueling. When making a change to the Surveillance Frequency Control Program associated with the surveillance test frequency of the engineered safety features actuation signal system, the licensee failed to collect and review all commitments made to the NRC as required by NEI 04-10, Risk-Informed Method for Control of Surveillance Frequencies, Revision 1, and failed to follow the requirements of NEI 99-04, Guidelines for Managing NRC Commitment Changes, Revision 0. In accordance with NRC Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a cross-cutting aspect in the area of human Page 6 of 8

1Q/2015 Inspection Findings - Palo Verde 3 performance because the licensee leaders did not use a systematic process for evaluating and implementing change so that nuclear safety remains the overriding priority. Inspection Report# : 2013009 (pdf) Barrier Integrity Significance: Apr 02, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Follow Surveillance Testing Procedure The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, which states, in part, Activities affecting quality shall be prescribed by documented instructions, procedures, or drawings, of a type appropriate to the circumstances and shall be accomplished in accordance with these instructions, procedures, or drawings. Specifically, between November 5, 2010 and September 17, 2012, the licensee failed to follow Procedure 73DP-9ZZ14, Surveillance Testing, Step 3.6.1, Failed Step or Out of Tolerance Data, which requires personnel to write a Palo Verde Action Request (PVAR) when a failed surveillance test is encountered. On three separate occasions, the licensee failed to initiate a Palo Verde action request when the containment air lock door seal surveillance test failed. In response to this issue, the licensee confirmed that minor maintenance had been performed on the containment air lock door seals immediately following the failure of the surveillances and the surveillances then met the procedure requirements. This finding was entered into the licensees corrective action program as Palo Verde Action Requests (PVARs) 4499119 and 4499123. The team determined that the failure to follow Procedure 73DP-9ZZ14, Surveillance Testing, which required maintenance personnel to write a Palo Verde action request upon the failure of a surveillance test, was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it would lead to a more significant safety concern. Specifically, by not initiating Palo Verde action requests for failed surveillances, the licensee missed the opportunity to enter the failures into their corrective action program, perform formal operability determinations, consider the conditions for identification of maintenance rule functional failures, identify performance trends, and ultimately, correct the adverse condition in a timely manner. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 3, Barrier Integrity Screening Questions, the issue screened as having very low safety significance (Green) because it did not represent an actual open pathway in the physical integrity of reactor containment and did not involve an actual reduction in function of hydrogen igniters in the reactor containment. This finding had a cross-cutting aspect in the area of human performance because licensee leaders failed to ensure that personnel, equipment, procedures, and other resources are available and adequate to support nuclear safety. Inspection Report# : 2013009 (pdf) Emergency Preparedness Occupational Radiation Safety Page 7 of 8

1Q/2015 Inspection Findings - Palo Verde 3 Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : June 16, 2015 Page 8 of 8

2Q/2015 Inspection Findings - Palo Verde 3 Palo Verde 3 2Q/2015 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2014 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to Verify the Adequacy of the Design of the Diesel Fuel Oil Cooler Green. The inspectors reviewed a self-revealing Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control for the stations failure to adequately review the suitability of materials of the diesel fuel oil cooler. Specifically, the Unit 2 A diesel generator fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. This corrosion ultimately affected the structural integrity of the cooler which rendered the A essential spray pond inoperable. In response to this, the licensee has replaced all six of the fuel oil cooler covers and initiated a design change to remove the fuel oil cooler from service. The licensee has entered the issue into the corrective action program as Condition Report Disposition Request 4543394. The failure to verify the adequacy of the design of the diesel fuel oil cooler was a performance deficiency. The performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone to ensure the availability, reliability, capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the Unit 2 A diesel fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. The corrosion ultimately affected the structural integrity of the cooler which rendered the Unit 2 A spray pond inoperable. In accordance with NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions. The finding screened to a detailed risk evaluation because it involved a potential loss of one train of safety related equipment for longer than the technical specification allowed outage time. A Region IV senior reactor analyst performed the detailed risk evaluation. The change to the core damage frequency was 1.5E-7/year (Green). The dominant core damage sequences included loss of offsite power events that lead to station blackout conditions. The gas turbine generators and the auxiliary feedwater system helped to minimize the risk. The inspectors determined this finding has no cross-cutting aspect because it is not indicative of current performance. Inspection Report# : 2014005 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Provide Adequate Technical Justification for Operability Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50 Appendix B, Criterion V, Instructions, Procedures, and Drawings, for the failure of operations and engineering personnel to follow station procedures to provide an adequate technical justification for continued operation of a degraded structure, system, or component. Specifically, after discovering that the turbine driven auxiliary feedwater pump exhaust line did not have any tornado missile protection, operators performed an immediate operability determination and declared the system Page 1 of 4

2Q/2015 Inspection Findings - Palo Verde 3 operable. The inspectors challenged this evaluation and determined the licensee did not provide adequate technical justification for continued operation with this condition because: (1) the evaluation relied on a probabilistic risk assessment that assumed the turbine driven auxiliary feedwater pump fails due to impact from a tornado-born missile, and (2) the evaluation assumed that the results of a future analysis would provide satisfactory results. In response to the inspectors operability concerns, plant personnel subsequently completed an analysis that provided a reasonable expectation that the turbine driven auxiliary feedwater pump would be able to perform its safety function if impacted by a tornado-born missile. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4255816. The inspectors concluded that the failure of plant personnel to adequately evaluate the operability of a safety-related structure, system, or component was a performance deficiency. The inspectors concluded the performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. The inspectors performed the initial significance determination for the performance deficiency using NRC Inspection Manual 0609, Appendix A, Exhibit 4, External Events Screening Questions, dated July 1, 2012. The finding required a detailed risk evaluation because the turbine driven auxiliary feedwater pump is one train of a system that supports a risk significant function. Therefore, a Region IV senior reactor analyst performed a bounding detailed risk evaluation. The change to the core damage frequency was 7E-10/year (Green). The dominant core damage sequences included a tornado induced loss of offsite power initiating event, failure of the turbine driven auxiliary feedwater pump, and random failures of the motor driven auxiliary feedwater pumps. The low frequency for the tornado induced loss of offsite power initiating event helped to minimize the risk significance. The inspectors determined this finding has a cross-cutting aspect in the area of human because the licensee failed to utilize a conservative bias in its evaluation of the missing tornado missile protection, considering the risk significance of the turbine driven auxiliary feedwater pump and lack of any technical evaluation [H.14] (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Translate Design Basis Requirements for Establishing Operability of Spray Pond System Green. The inspectors identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, for the failure to correctly translate the mission time of the essential spray pond system into a procedure used to determine operability. In response to the inspectors concerns, the licensee re-evaluated essential spray pond operability determinations that had used the erroneous 26-day mission time and concluded that acceptable margin was available to ensure the system would remain operable for the 30-day mission time. The licensee entered this issue into the corrective action program as Palo Verde Action Request 4550539. The failure to ensure that design basis information associated with the mission time of the essential spray pond system was correctly translated into a procedure used to determine operability was a performance deficiency. This performance deficiency was more than minor because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, the failure to use the correct mission time when determining operability could establish nonconservative results that could lead to the essential spray pond system not being able to meet its design safety function. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the issue screened as having very low safety significance (Green) because it was a design or qualification deficiency that did not represent a loss of operability or functionality; did not represent an actual loss of safety function of the system or train; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding has a cross-cutting aspect in the area of human performance because the licensee failed to create and maintain complete, accurate, and Page 2 of 4

2Q/2015 Inspection Findings - Palo Verde 3 up-to-date documentation. Specifically, after initially recognizing the adverse condition, the licensee did not document a standing order or temporary procedure change to prevent operability evaluations from using the incorrect essential spray pond mission time [H.7]. (Section 1R15). Inspection Report# : 2014004 (pdf) Significance: Sep 30, 2014 Identified By: NRC Item Type: NCV Non-Cited Violation Component Design Basis Inspection Green. The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, "Design Control," for the licensees failure to assure the adequacy of degraded voltage relay setpoints. Specifically, the team identified that the licensee failed to perform calculations to demonstrate the voltage setpoints for the installed degraded voltage relays would afford adequate voltage to safety-related loads during worst case accident loading. The failure to assure the adequacy of degraded voltage relay setpoints for voltage and the time delay by performing adequate voltage drop calculations was a performance deficiency. This finding is more than minor because it was associated with the design control attribute of the Mitigating Systems cornerstone and it adversely impacted to the cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events. Specifically, the failure to properly ensure that safety-related electrical devices had adequate voltage could impact their safety function. The basis for this conclusion was that despite the non-conservative voltage inputs to voltage calculations and, therefore, loss of design margin for available voltage, there was still adequate voltage for the circuits to perform their safety function based on worst case voltage as demonstrated in the updated calculations. The licensee developed design basis calculations for its DVR voltage setpoints and committed to addressing the technical basis and interim actions in a commitment letter for their corrective actions. There is no cross-cutting aspect associated with this finding because it is a historical condition and not indicative of current performance. (Section 1R21) Inspection Report# : 2014004 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Security Page 3 of 4

2Q/2015 Inspection Findings - Palo Verde 3 Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : August 07, 2015 Page 4 of 4

3Q/2015 Inspection Findings - Palo Verde 3 Palo Verde 3 3Q/2015 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2014 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to Verify the Adequacy of the Design of the Diesel Fuel Oil Cooler Green. The inspectors reviewed a self-revealing Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control for the stations failure to adequately review the suitability of materials of the diesel fuel oil cooler. Specifically, the Unit 2 A diesel generator fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. This corrosion ultimately affected the structural integrity of the cooler which rendered the A essential spray pond inoperable. In response to this, the licensee has replaced all six of the fuel oil cooler covers and initiated a design change to remove the fuel oil cooler from service. The licensee has entered the issue into the corrective action program as Condition Report Disposition Request 4543394. The failure to verify the adequacy of the design of the diesel fuel oil cooler was a performance deficiency. The performance deficiency is more than minor because it affected the equipment performance attribute of the Mitigating Systems cornerstone to ensure the availability, reliability, capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the Unit 2 A diesel fuel oil cooler design allowed for the interface of two dissimilar metals which promoted galvanic corrosion. The corrosion ultimately affected the structural integrity of the cooler which rendered the Unit 2 A spray pond inoperable. In accordance with NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions. The finding screened to a detailed risk evaluation because it involved a potential loss of one train of safety related equipment for longer than the technical specification allowed outage time. A Region IV senior reactor analyst performed the detailed risk evaluation. The change to the core damage frequency was 1.5E-7/year (Green). The dominant core damage sequences included loss of offsite power events that lead to station blackout conditions. The gas turbine generators and the auxiliary feedwater system helped to minimize the risk. The inspectors determined this finding has no cross-cutting aspect because it is not indicative of current performance. Inspection Report# : 2014005 (pdf) Barrier Integrity Emergency Preparedness Page 1 of 2

3Q/2015 Inspection Findings - Palo Verde 3 Occupational Radiation Safety Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : December 15, 2015 Page 2 of 2

4Q/2015 Inspection Findings - Palo Verde 3 Palo Verde 3 4Q/2015 Plant Inspection Findings Initiating Events Mitigating Systems Significance: Dec 31, 2015 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Adequately Assess Risk Prior to Performing Maintenance on ADV 178 DRAFT-The inspectors identified a non-cited violation of 10 CFR 50.65(a)(4) for the failure to adequately assess risk associated with an emergent maintenance activity on one of the atmospheric dump valves. Specifically, when the licensee developed the Technical Specification Limiting Condition for Operation 3.0.4.b risk assessment made to change modes from Mode 3 to Modes 2 and 1, they did not consider that the required repairs to the affected component, atmospheric dump valve (ADV) 178, would also require the removal of nitrogen from ADV 185 and the complete isolation of ADV 184. The licensee entered this issue into the corrective action program as CR 2015 10655 002. The licensees failure on May 3, 2015, to adequately assess the risk associated with performing corrective maintenance on ADV 178 was a performance deficiency. The performance deficiency is more than minor because it affected the configuration control attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences, in that the performance deficiency resulted in the licensee operating Unit 3 in Mode 1 with multiple ADVs in the unit inoperable. The inspectors used NRC Manual Chapter 0609, Appendix K, Maintenance Risk Assessment and Risk Management Significance Determination Process, Flowchart 1, to determine that the finding has very low safety significance because the incremental core damage probability deficit and the incremental large early release probability deficit used to evaluate the magnitude of the error in the licensees inadequate risk assessment were less than 1E-6 and 1E-7, respectively. Because the primary reason for this performance deficiency was that after ADV 178 failed its partial-stroke test on May 2, the licensees process for performing LCO 3.0.4b risk assessments did not include adequate instructions for identifying and managing risks before proceeding with the plant startup, this finding has a cross-cutting aspect in the human performance area of work management. Inspection Report# : 2015004 (pdf) Significance: Dec 31, 2015 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to Promptly Correct an Identified Condition Adverse to Quality on a Safety Related HPSI Pump 178 DRAFT-The inspectors reviewed a self-revealing, non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, Corrective Action associated with the licensee not promptly correcting an apparent condition adverse to quality. Specifically, after a non-licensed operator (NLO) watch stander identified discolored lube oil in the High Pressure Safety Injection (HPSI) pump A motor outboard bearing, the licensee did not initiate a condition report, and therefore, Page 1 of 3

4Q/2015 Inspection Findings - Palo Verde 3 did not correct the associated condition, which was that the pumps outboard bearing had been damaged by an axially displaced pump shaft. Thirty-seven days later, technicians scheduled to perform planned maintenance on the pump properly identified and corrected that condition. The licensees failure to promptly correct a visually apparent condition adverse to quality identified during non-licensed operator shift rounds is a performance deficiency. That performance deficiency is more than minor because it affected the equipment reliability attribute of the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, this finding allowed a degraded pump motor to remain in service for 37 days. The inspectors used IMC 0609 Appendix A, Exhibit 2 Mitigating System Screening Question to determine that the finding was of very low safety significance (Green). Specifically, the finding screened to Green on question A.1 because a subsequent vendor analysis determined that the finding was a deficiency only affecting the design or qualification of a mitigating SSC, while the SSC remained operable. Because the primary cause of this finding involved the lack of a consistent, systematic approach to decide how to address conditions adverse to quality, this finding has a consistent process cross-cutting aspect in the area of human performance. Inspection Report# : 2015004 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Page 2 of 3

4Q/2015 Inspection Findings - Palo Verde 3 Last modified : March 01, 2016 Page 3 of 3

1Q/2016 Inspection Findings - Palo Verde 3 Palo Verde 3 1Q/2016 Plant Inspection Findings Initiating Events Significance: Jan 15, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Inadequate Loop Flow Test Procedure The team identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Units 1, 2, and 3, respectively, because the licensee had not established criteria for determining when a fire main loop had degraded and had not properly tested all portions of the fire main loop. Specifically, the licensee had not established a differential pressure that would initiate actions to evaluate the cause for a degradation and the licensee had not determined the flow through individual flow paths in their auxiliary and control buildings. The licensee documented these issues in Condition Reports 15 00513 and 16 00686 and initiated actions to correct the procedure and perform the flow test of the individual loops. The team identified a performance deficiency related to the procedure used to test their fire main loop. Specifically, the licensee had not established criteria for determining a degraded fire main loop and had not properly tested all portions of the fire main loop. This performance deficiency was more than minor because it was associated with the protection against external factors attribute (fire) and adversely affected the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to test the fire main loops inside the control/auxiliary building separately and failure to establish appropriate acceptance criteria affected the ability to demonstrate the continued capability to deliver adequate flow and pressure to the fire suppression systems. The finding was screened in accordance with NRC Inspection Manual Chapter (IMC) 0609, Significance Determination Process, Attachment 4, Initial Characterization of Findings, dated June 19, 2012. The inspectors determined that an IMC 0609, Appendix F, Fire Protection Significance Determination Process, dated September 20, 2013, review was required as the finding affected the ability to reach and maintain safe shutdown conditions in case of a fire. Using IMC 0609, Appendix F, Attachment 1, Fire Protection Significance Determination Process Worksheet, dated September 20, 2013, the finding was screened as a Green finding of very low safety significance in accordance with Task 1.4.7, Fire Water Supply, Question A. The inspectors determined that although the licensee failed to test portions of the fire main system in accordance with code requirements, the inspectors determined that at least 50 percent of required fire water capacity would be available based on the testing is done with only one fire pump in service and there are three available fire pumps. Since these fire main loops inside the control/auxiliary building had not been monitored for pressure changes when flow tested since initial testing and nothing caused the licensee to reevaluate the test, the team determined that this failure did not reflect current performance. Inspection Report# : 2015008 (pdf) Mitigating Systems Page 1 of 4

1Q/2016 Inspection Findings - Palo Verde 3 Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Fatigue failure of pneumatic fitting due to excessive vibrations The inspectors documented a self-revealing non-cited violation of Technical Specification 3.7.2 Condition A for exceeding the allowed outage time of seven days. Specifically Unit 3s MSIV-181 actuator B was found to be inoperable from May 1, 2015 until August 15, 2015 when a design change installed a new swivel type fitting on an air-line without taking into account vibrational forces, as required by the stations procedure. This eventually resulted in the fatigue failure of the fitting, depressurizing the actuator B to less than 5000 psig. The licensee entered this condition in their corrective action program and performed a Level 2 cause evaluation under Condition Report 15-02686. The inspectors concluded that the failure to take into account excessive vibrational stresses as required by procedure 81DP-0EE10, Design Change Process Step J.2.9.1, when implementing the design change was a performance deficiency. The performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Cornerstone to ensure the availability, reliability, and the capability of systems that respond to initiating events to prevent undesirable consequences. Specifically the failure to account for the vibrational stresses resulted in the fatigue failure of the air-line fitting which depressurized one of two hydraulic accumulators thereby reducing the reliability of the system to initiate a fast closure of MSIV-181 upon receipt of a Main Steam Isolation Signal. The inspectors performed the initial significance determination using NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions, Issue Date: 06/19/12. The finding screened as Green since the MSIV remained capable of performing its safety function with the alternate accumulator. The finding has a cross-cutting aspect in the area of human performance associated with the avoid complacency component. Specifically the licensee assumed there were no factors affecting the mechanical design requirements beyond the performance requirements. As a result the licensee failed to perform a thorough review of the mechanical conditions (such as vibrations) the air-line was subjected. Inspection Report# : 2016001 (pdf) Significance: Mar 24, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Operations Department Failure to Document Conditions Adverse to Quality in Condition Reports DRAFT-The inspection activities described in this report were performed between March 8 and March 24, 2016, by three inspectors from the NRCs Region IV offices, the senior resident inspector at Palisades Nuclear Generating Station, and the resident inspector at the Palo Verde Nuclear Generating Station. The report documents one finding of very low safety significance (Green). This finding involved a violation of NRC requirements. The significance of inspection findings is indicated by their color (Green, White, Yellow, or Red), which is determined using Inspection Manual Chapter 0609, Significance Determination Process. Their cross-cutting aspects are determined using Inspection Manual Chapter 0310, Aspects Within the Cross-Cutting Areas. Violations of NRC requirements are dispositioned in accordance with the NRC Enforcement Policy. The NRC's program for overseeing the safe operation of commercial nuclear power reactors is described in NUREG-1649, Reactor Oversight Process. Assessment of Problem Identification and Resolution Based on its inspection sample, the team concluded that the licensee maintained a corrective action program in which individuals generally identified issues at an appropriately low threshold. Once entered into the corrective action program, the licensee generally evaluated and addressed these issues appropriately and timely, commensurate with their safety significance. The licensees corrective actions were generally effective, addressing the causes and extents Page 2 of 4

1Q/2016 Inspection Findings - Palo Verde 3 of condition of problems. The licensee appropriately evaluated industry operating experience for relevance to the facility and entered applicable items in the corrective action program. The licensee incorporated industry and internal operating experience in its root cause and apparent cause evaluations. The licensee performed effective and self-critical nuclear oversight audits and self-assessments. The licensee maintained an effective process to ensure significant findings from these audits and self-assessments were addressed. The licensee maintained a safety-conscious work environment in which personnel were willing to raise nuclear safety concerns without fear of retaliation. Inspection Report# : 2016008 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to use adequate engineering and radiological controls resulting in two unplanned intakes A self-revealing non-cited violation of 10 CFR 20.1701 was identified for the licensees failure to implement adequate processes or engineering controls to control the concentration of radioactive material in air and prevent internal dose to workers. Specifically, on April 14, 2015, the licensee implemented inadequate engineering and radiological controls to remove a pre-filter and Y-connector from a high efficiency particulate air (HEPA) ventilation unit resulting in an airborne radioactivity condition and two intakes. The licensee was alerted to this issue when two radiation protection technicians alarmed PM12 portal monitors upon their exit from the radiologically controlled area. The licensee took immediate corrective actions and instructed these technicians to report to dosimetry for whole body counting and evaluation. The licensee entered this issue into their corrective action program as Condition Report (CR) CR 16-01093. The failure to implement adequate engineering and radiological controls during HEPA unit maintenance in accordance with procedures and the radiological exposure permit requirements was a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety attribute of Program and Process and adversely affected the cornerstone objective to ensure the adequate protection of the worker health and safety from exposure to radiation from radioactive material during routine civilian nuclear reactor operation. This was evident by two workers receiving unplanned intakes. Using IMC 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, issue date 8/19/2008, the finding was determined to be of very low safety significance (Green) because it did not involve: (1) as low as reasonably achievable (ALARA) planning and controls, (2) an overexposure, (3) a substantial potential for an overexposure, or (4) an impaired ability to assess dose. The inspectors concluded that the finding has a Conservative Bias cross-cutting Page 3 of 4

1Q/2016 Inspection Findings - Palo Verde 3 aspect in the Human Performance area because the licensee failed to use decision-making practices that emphasized prudent choices over those that are simply allowable when they changed out the HEPA pre-filter and Y connector components. Inspection Report# : 2016001 (pdf) Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : July 11, 2016 Page 4 of 4

2Q/2016 Inspection Findings - Palo Verde 3 Palo Verde 3 2Q/2016 Plant Inspection Findings Initiating Events Significance: Jan 15, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Inadequate Loop Flow Test Procedure The team identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Units 1, 2, and 3, respectively, because the licensee had not established criteria for determining when a fire main loop had degraded and had not properly tested all portions of the fire main loop. Specifically, the licensee had not established a differential pressure that would initiate actions to evaluate the cause for a degradation and the licensee had not determined the flow through individual flow paths in their auxiliary and control buildings. The licensee documented these issues in Condition Reports 15 00513 and 16 00686 and initiated actions to correct the procedure and perform the flow test of the individual loops. The team identified a performance deficiency related to the procedure used to test their fire main loop. Specifically, the licensee had not established criteria for determining a degraded fire main loop and had not properly tested all portions of the fire main loop. This performance deficiency was more than minor because it was associated with the protection against external factors attribute (fire) and adversely affected the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to test the fire main loops inside the control/auxiliary building separately and failure to establish appropriate acceptance criteria affected the ability to demonstrate the continued capability to deliver adequate flow and pressure to the fire suppression systems. The finding was screened in accordance with NRC Inspection Manual Chapter (IMC) 0609, Significance Determination Process, Attachment 4, Initial Characterization of Findings, dated June 19, 2012. The inspectors determined that an IMC 0609, Appendix F, Fire Protection Significance Determination Process, dated September 20, 2013, review was required as the finding affected the ability to reach and maintain safe shutdown conditions in case of a fire. Using IMC 0609, Appendix F, Attachment 1, Fire Protection Significance Determination Process Worksheet, dated September 20, 2013, the finding was screened as a Green finding of very low safety significance in accordance with Task 1.4.7, Fire Water Supply, Question A. The inspectors determined that although the licensee failed to test portions of the fire main system in accordance with code requirements, the inspectors determined that at least 50 percent of required fire water capacity would be available based on the testing is done with only one fire pump in service and there are three available fire pumps. Since these fire main loops inside the control/auxiliary building had not been monitored for pressure changes when flow tested since initial testing and nothing caused the licensee to reevaluate the test, the team determined that this failure did not reflect current performance. Inspection Report# : 2015008 (pdf) Mitigating Systems Page 1 of 4

2Q/2016 Inspection Findings - Palo Verde 3 Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Fatigue failure of pneumatic fitting due to excessive vibrations The inspectors documented a self-revealing non-cited violation of Technical Specification 3.7.2 Condition A for exceeding the allowed outage time of seven days. Specifically Unit 3s MSIV-181 actuator B was found to be inoperable from May 1, 2015 until August 15, 2015 when a design change installed a new swivel type fitting on an air-line without taking into account vibrational forces, as required by the stations procedure. This eventually resulted in the fatigue failure of the fitting, depressurizing the actuator B to less than 5000 psig. The licensee entered this condition in their corrective action program and performed a Level 2 cause evaluation under Condition Report 15-02686. The inspectors concluded that the failure to take into account excessive vibrational stresses as required by procedure 81DP-0EE10, Design Change Process Step J.2.9.1, when implementing the design change was a performance deficiency. The performance deficiency was more than minor because it affected the equipment performance attribute of the Mitigating Cornerstone to ensure the availability, reliability, and the capability of systems that respond to initiating events to prevent undesirable consequences. Specifically the failure to account for the vibrational stresses resulted in the fatigue failure of the air-line fitting which depressurized one of two hydraulic accumulators thereby reducing the reliability of the system to initiate a fast closure of MSIV-181 upon receipt of a Main Steam Isolation Signal. The inspectors performed the initial significance determination using NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions, Issue Date: 06/19/12. The finding screened as Green since the MSIV remained capable of performing its safety function with the alternate accumulator. The finding has a cross-cutting aspect in the area of human performance associated with the avoid complacency component. Specifically the licensee assumed there were no factors affecting the mechanical design requirements beyond the performance requirements. As a result the licensee failed to perform a thorough review of the mechanical conditions (such as vibrations) the air-line was subjected. Inspection Report# : 2016001 (pdf) Significance: Mar 24, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Operations Department Failure to Document Conditions Adverse to Quality in Condition Reports The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, for the licensees failure to document conditions adverse to quality in the corrective action program. Previous similar failures to initiate condition reports led to, or contributed to, two significant conditions adverse to quality over the last 15 months. The failure of the operations department to document identified conditions adverse to quality in condition reports, as required by Procedure 01DP-0AP12, Condition Reporting Process, Revision 23, was a performance deficiency. This performance deficiency was more than minor, and therefore a finding, because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, on two other occasions since January 2015, failures by operations personnel to write condition reports for equipment-related problems resulted in or contributed to significant conditions adverse to quality. This performance deficiency demonstrated a continued gap within Palo Verde Nuclear Generation Stations operations department in understanding condition report initiation criteria. This performance deficiency is associated with the mitigating systems cornerstone. Using NRC Inspection Manual Chapter 0609, Appendix A, the team determined that this finding was of very low safety significance (Green) because it did not affect the operability or functionality of a mitigating structure, system, or component. This finding has a resolution cross-cutting aspect in the area of problem identification and resolution because the licensee failed to take effective corrective actions to address issues in a timely manner commensurate with their safety significance (P.3) Page 2 of 4

2Q/2016 Inspection Findings - Palo Verde 3 Inspection Report# : 2016008 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to use adequate engineering and radiological controls resulting in two unplanned intakes A self-revealing non-cited violation of 10 CFR 20.1701 was identified for the licensees failure to implement adequate processes or engineering controls to control the concentration of radioactive material in air and prevent internal dose to workers. Specifically, on April 14, 2015, the licensee implemented inadequate engineering and radiological controls to remove a pre-filter and Y-connector from a high efficiency particulate air (HEPA) ventilation unit resulting in an airborne radioactivity condition and two intakes. The licensee was alerted to this issue when two radiation protection technicians alarmed PM12 portal monitors upon their exit from the radiologically controlled area. The licensee took immediate corrective actions and instructed these technicians to report to dosimetry for whole body counting and evaluation. The licensee entered this issue into their corrective action program as Condition Report (CR) CR 16-01093. The failure to implement adequate engineering and radiological controls during HEPA unit maintenance in accordance with procedures and the radiological exposure permit requirements was a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety attribute of Program and Process and adversely affected the cornerstone objective to ensure the adequate protection of the worker health and safety from exposure to radiation from radioactive material during routine civilian nuclear reactor operation. This was evident by two workers receiving unplanned intakes. Using IMC 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, issue date 8/19/2008, the finding was determined to be of very low safety significance (Green) because it did not involve: (1) as low as reasonably achievable (ALARA) planning and controls, (2) an overexposure, (3) a substantial potential for an overexposure, or (4) an impaired ability to assess dose. The inspectors concluded that the finding has a Conservative Bias cross-cutting aspect in the Human Performance area because the licensee failed to use decision-making practices that emphasized prudent choices over those that are simply allowable when they changed out the HEPA pre-filter and Y connector components. Inspection Report# : 2016001 (pdf) Public Radiation Safety Page 3 of 4

2Q/2016 Inspection Findings - Palo Verde 3 Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Last modified : August 29, 2016 Page 4 of 4

3Q/2016 Inspection Findings - Palo Verde 3 Palo Verde 3 3Q/2016 Plant Inspection Findings Initiating Events Significance: Jan 15, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Inadequate Loop Flow Test Procedure The team identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Units 1, 2, and 3, respectively, because the licensee had not established criteria for determining when a fire main loop had degraded and had not properly tested all portions of the fire main loop. Specifically, the licensee had not established a differential pressure that would initiate actions to evaluate the cause for a degradation and the licensee had not determined the flow through individual flow paths in their auxiliary and control buildings. The licensee documented these issues in Condition Reports 15 00513 and 16 00686 and initiated actions to correct the procedure and perform the flow test of the individual loops. The team identified a performance deficiency related to the procedure used to test their fire main loop. Specifically, the licensee had not established criteria for determining a degraded fire main loop and had not properly tested all portions of the fire main loop. This performance deficiency was more than minor because it was associated with the protection against external factors attribute (fire) and adversely affected the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to test the fire main loops inside the control/auxiliary building separately and failure to establish appropriate acceptance criteria affected the ability to demonstrate the continued capability to deliver adequate flow and pressure to the fire suppression systems. The finding was screened in accordance with NRC Inspection Manual Chapter (IMC) 0609, Significance Determination Process, Attachment 4, Initial Characterization of Findings, dated June 19, 2012. The inspectors determined that an IMC 0609, Appendix F, Fire Protection Significance Determination Process, dated September 20, 2013, review was required as the finding affected the ability to reach and maintain safe shutdown conditions in case of a fire. Using IMC 0609, Appendix F, Attachment 1, Fire Protection Significance Determination Process Worksheet, dated September 20, 2013, the finding was screened as a Green finding of very low safety significance in accordance with Task 1.4.7, Fire Water Supply, Question A. The inspectors determined that although the licensee failed to test portions of the fire main system in accordance with code requirements, the inspectors determined that at least 50 percent of required fire water capacity would be available based on the testing is done with only one fire pump in service and there are three available fire pumps. Since these fire main loops inside the control/auxiliary building had not been monitored for pressure changes when flow tested since initial testing and nothing caused the licensee to reevaluate the test, the team determined that this failure did not reflect current performance. Inspection Report# : 2015008 (pdf) Mitigating Systems Page 1 of 7

3Q/2016 Inspection Findings - Palo Verde 3 Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Establish Maintenance Activities and Instructions for Gas Turbine Generator Station Blackout Batteries DRAFT: The team identified a Green, non-cited violation of 10 CFR 50.63, Loss of All Alternating Current, which states, in part, The alternate AC power source, as defined in 10 CFR 50.2, will constitute acceptable capability to withstand station blackout provided an analysis is performed which demonstrates that the plant has this capability from onset of the station blackout until the alternate AC source(s) and required shutdown equipment are started and lined up to operate. Specifically, prior to August 5, 2016, the licensee replaced the gas turbine generator station blackout batteries in a modification to address obsolete components, but failed to identify the initial parameters to baseline the batteries and failed to implement a battery testing and maintenance program. In response to this issue, the licensee determined that the batteries continued to satisfy their design function and began to develop the necessary testing and preventive maintenance procedures. This finding was entered into the licensees corrective action program as Condition Report 14-02346. The team determined that failure to implement preventative maintenance activities for the gas turbine generator station blackout batteries since their replacement in 2014 was a performance deficiency. This performance deficiency was more than minor because it was associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the licensee replaced the gas turbine generator station blackout batteries in a modification to address obsolete components, but failed to identify the initial parameters to baseline the batteries and failed to implement a battery testing and maintenance program. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in a loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a crosscutting aspect in the area of problem identification and resolution associated with resolution because the licensee failed to take effective corrective actions to address issues in a timely manner commensurate with their safety significance [P.3]. Inspection Report# : 2016007 (pdf) Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Translate Information from Design Modification into Design Documentation, Operating Procedures, and Operator Training DRAFT: The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, measures shall be established to assure that applicable regulatory requirements and the design basis, for those structures, systems, and components to which this appendix applies are correctly translated into specifications, drawings, procedures, and instructions. Specifically, prior to August 5, 2016, the licensee did not adequately implement operator training and annunciator response procedures for Design Modification 216914, which resulted in the failure to adequately evaluate the impact on operability for the loss of forced cooling capability for the L31 load center transformer. In response to this issue, the licensee confirmed that the L31 load center was operable, but degraded, based on the remaining life for the transformer insulation when considering the maximum design basis accident load on the transformer and the expected load duration with the cooling fans disabled. This finding was Page 2 of 7

3Q/2016 Inspection Findings - Palo Verde 3 entered into the licensees corrective action program as Condition Report 3-16-12571 and Condition Report 3 13316. The team determined that the failure to adequately update design documentation, operating procedures, and operator training was a performance deficiency. This performance deficiency was more than minor because it was associated with the design control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to update appropriate design calculations, annunciator response procedures, and licensed operator training when Design Modification 216904 was implemented in 1996 contributed to conditions that resulted in Operations preparing an inadequate Immediate Operability Determination when the L31 transformer cooling equipment failed on April 21, 2015. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in the loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding did not have a crosscutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2016007 (pdf) Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Verify the Ability to Isolate the Safety-Related Condensate Storage Tank from Non-Safety Piping DRAFT: The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis for those structures, systems, and components to which this appendix applies are correctly translated into specifications, drawings, procedures, and instructions. Specifically, prior to August 3, 2016, the licensee failed to establish measures to assure an adequate water level was maintained in the condensate storage tank, failed to establish a time critical action to isolate the condensate storage tank, and failed to establish specific procedures to isolate the condensate storage tank in the event of a tornado. In response to this issue, the licensee initiated the process to revise plant procedures and evaluate associated operator time critical actions. This finding was entered into the licensees corrective action program as Condition Reports 16-13761, 16-12430, and 16 13762. The team determined that failure to verify the ability to isolate the safety-related condensate storage tank from the non-safety portion of the auxiliary feedwater system while preserving enough tank capacity to safely shutdown was a performance deficiency. This performance deficiency was more than minor because it was associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the licensees failure to ensure timely isolation of the condensate storage tank would adversely affect the capability to safely shutdown the plant using the condensate storage tank and safety-related auxiliary feedwater system. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in a loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding did not have a crosscutting aspect because the most significant contributor did not reflect current licensee performance. Page 3 of 7

3Q/2016 Inspection Findings - Palo Verde 3 Inspection Report# : 2016007 (pdf) Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Pipe Welds Not Incorporated into the Inservice Inspection Program DRAFT: The team identified a Green, non-cited violation of 10 CFR 50.55a(g)4, Inservice Inspection Standards Requirement for Operating Plants, which states, in part, Throughout the service life of a pressurized water-cooled nuclear power facility, components that are classified as ASME Code Class 1, Class 2, and Class 3 must meet the requirements set forth in Section XI of the ASME Code. The ASME Code, Section XI, Article IWA-2610, requires that a reference system be established for all welds and areas subject to a surface or volumetric examination. Specifically, prior to August 8, 2016, for two welds located in an ASME Code, Section XI, Class 3, suction line between the condensate storage tank and the non-safety-related auxiliary feedwater pump, a weld reference system was not established. In response to this issue, the licensee reclassified the subject welds and scheduled weld examinations to ensure potential cracks would be detected. This finding was entered into the licensees corrective action program as Condition Report 16-13150. The team determined that the licensees failure to establish a weld reference system for two welds in the suction line between the condensate storage tank and the startup feed pump system was contrary to the ASME Code, Section XI, Article IWA-2610, and was a performance deficiency. This performance deficiency was more than minor because the finding, if left uncorrected, would become a more significant safety concern. Specifically, absent NRC identification, the licensee would not have examined these welds, which could have allowed service induced cracks to go undetected. Undetected cracks would place the suction pipe segment at increased risk for through-wall leakage and/or failure, which would affect the safety of an operating reactor. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in the loss of operability of functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding did not have a crosscutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2016007 (pdf) Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Fatigue failure of pneumatic fitting due to excessive vibrations The inspectors documented a self-revealing non-cited violation of Technical Specification 3.7.2 Condition A for exceeding the allowed outage time of seven days. Specifically Unit 3s MSIV-181 actuator B was found to be inoperable from May 1, 2015 until August 15, 2015 when a design change installed a new swivel type fitting on an air-line without taking into account vibrational forces, as required by the stations procedure. This eventually resulted in the fatigue failure of the fitting, depressurizing the actuator B to less than 5000 psig. The licensee entered this condition in their corrective action program and performed a Level 2 cause evaluation under Condition Report 15-02686. The inspectors concluded that the failure to take into account excessive vibrational stresses as required by procedure 81DP-0EE10, Design Change Process Step J.2.9.1, when implementing the design change was a performance deficiency. The performance deficiency was more than minor because it affected the equipment performance attribute Page 4 of 7

3Q/2016 Inspection Findings - Palo Verde 3 of the Mitigating Cornerstone to ensure the availability, reliability, and the capability of systems that respond to initiating events to prevent undesirable consequences. Specifically the failure to account for the vibrational stresses resulted in the fatigue failure of the air-line fitting which depressurized one of two hydraulic accumulators thereby reducing the reliability of the system to initiate a fast closure of MSIV-181 upon receipt of a Main Steam Isolation Signal. The inspectors performed the initial significance determination using NRC Inspection Manual 0609, Appendix A, Exhibit 2, Mitigating Systems Screening Questions, Issue Date: 06/19/12. The finding screened as Green since the MSIV remained capable of performing its safety function with the alternate accumulator. The finding has a cross-cutting aspect in the area of human performance associated with the avoid complacency component. Specifically the licensee assumed there were no factors affecting the mechanical design requirements beyond the performance requirements. As a result the licensee failed to perform a thorough review of the mechanical conditions (such as vibrations) the air-line was subjected. Inspection Report# : 2016001 (pdf) Significance: Mar 24, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Operations Department Failure to Document Conditions Adverse to Quality in Condition Reports The team identified a Green non-cited violation of 10 CFR Part 50, Appendix B, Criterion XVI, for the licensees failure to document conditions adverse to quality in the corrective action program. Previous similar failures to initiate condition reports led to, or contributed to, two significant conditions adverse to quality over the last 15 months. The failure of the operations department to document identified conditions adverse to quality in condition reports, as required by Procedure 01DP-0AP12, Condition Reporting Process, Revision 23, was a performance deficiency. This performance deficiency was more than minor, and therefore a finding, because if left uncorrected, it had the potential to lead to a more significant safety concern. Specifically, on two other occasions since January 2015, failures by operations personnel to write condition reports for equipment-related problems resulted in or contributed to significant conditions adverse to quality. This performance deficiency demonstrated a continued gap within Palo Verde Nuclear Generation Stations operations department in understanding condition report initiation criteria. This performance deficiency is associated with the mitigating systems cornerstone. Using NRC Inspection Manual Chapter 0609, Appendix A, the team determined that this finding was of very low safety significance (Green) because it did not affect the operability or functionality of a mitigating structure, system, or component. This finding has a resolution cross-cutting aspect in the area of problem identification and resolution because the licensee failed to take effective corrective actions to address issues in a timely manner commensurate with their safety significance (P.3) Inspection Report# : 2016008 (pdf) Barrier Integrity Emergency Preparedness Occupational Radiation Safety Page 5 of 7

3Q/2016 Inspection Findings - Palo Verde 3 Significance: Mar 30, 2016 Identified By: Self-Revealing Item Type: NCV Non-Cited Violation Failure to use adequate engineering and radiological controls resulting in two unplanned intakes A self-revealing non-cited violation of 10 CFR 20.1701 was identified for the licensees failure to implement adequate processes or engineering controls to control the concentration of radioactive material in air and prevent internal dose to workers. Specifically, on April 14, 2015, the licensee implemented inadequate engineering and radiological controls to remove a pre-filter and Y-connector from a high efficiency particulate air (HEPA) ventilation unit resulting in an airborne radioactivity condition and two intakes. The licensee was alerted to this issue when two radiation protection technicians alarmed PM12 portal monitors upon their exit from the radiologically controlled area. The licensee took immediate corrective actions and instructed these technicians to report to dosimetry for whole body counting and evaluation. The licensee entered this issue into their corrective action program as Condition Report (CR) CR 16-01093. The failure to implement adequate engineering and radiological controls during HEPA unit maintenance in accordance with procedures and the radiological exposure permit requirements was a performance deficiency. The performance deficiency was more than minor because it was associated with the Occupational Radiation Safety attribute of Program and Process and adversely affected the cornerstone objective to ensure the adequate protection of the worker health and safety from exposure to radiation from radioactive material during routine civilian nuclear reactor operation. This was evident by two workers receiving unplanned intakes. Using IMC 0609, Appendix C, Occupational Radiation Safety Significance Determination Process, issue date 8/19/2008, the finding was determined to be of very low safety significance (Green) because it did not involve: (1) as low as reasonably achievable (ALARA) planning and controls, (2) an overexposure, (3) a substantial potential for an overexposure, or (4) an impaired ability to assess dose. The inspectors concluded that the finding has a Conservative Bias cross-cutting aspect in the Human Performance area because the licensee failed to use decision-making practices that emphasized prudent choices over those that are simply allowable when they changed out the HEPA pre-filter and Y connector components. Inspection Report# : 2016001 (pdf) Public Radiation Safety Security Although the Security Cornerstone is included in the Reactor Oversight Process assessment program, the Commission has decided that specific information related to findings and performance indicators pertaining to the Security Cornerstone will not be publicly available to ensure that security information is not provided to a possible adversary. Other than the fact that a finding or performance indicator is Green or Greater-Than-Green, security related information will not be displayed on the public web page. Therefore, the cover letters to security inspection reports may be viewed. Miscellaneous Page 6 of 7

3Q/2016 Inspection Findings - Palo Verde 3 Last modified : December 08, 2016 Page 7 of 7

4Q/2016 Inspection Findings - Palo Verde 3 Palo Verde 3 4Q/2016 Plant Inspection Findings Initiating Events Significance: Sep 28, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Follow Advance Work Authorization Procedure The inspectors identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion V, Instructions, Procedures, and Drawings, because the licensee failed to accomplish activities affecting quality in accordance with documented procedures. Specifically, the inspectors identified multiple examples of design changes performed under the Advanced Work Authorization process which were placed into service prior to the completion of the associated engineering work orders. As an immediate corrective action, the licensee instituted a requirement for the design engineering director to approve all Advance Work Authorizations to ensure the in service point is clearly identified and understood. The licensee entered this issue into the corrective action program as Condition Report 16-09965. The failure to establish adequate constraints to ensure that final engineering approval of advance work is completed prior to placing modified systems in service was a performance deficiency. This performance deficiency was more than minor, and therefore a finding, because if left uncorrected, the performance deficiency would have the potential to lead to a more significant safety concern. Specifically, routinely failing to implement the requirements of the engineering design change advance work authorization process could result in equipment being placed in service without an approved design configuration. In accordance with Inspection Manual Chapter 0609, Significance Determination Process, Attachment 4, Initial Characterization of Findings, dated June 19, 2012, Table 2, reactor coolant system boundary issues are considered under the Initiating Event Cornerstone. Using Table 3, the inspectors determined the finding pertained to an event or degraded condition while the plant was shutdown and, therefore, used Inspection Manual Chapter 0609, Appendix G Shutdown Operations Significance Determination Process, dated May 9, 2014, for significance determination. The inspectors reviewed Appendix G, Attachment 1, Exhibit 2, Initiating Events Screening Questions. The inspectors answered No to Question A.1, and found all other questions to be not applicable and therefore concluded that the finding was of very low safety significance (Green). The inspectors determined that this finding had a human performance crosscutting aspect associated with work management, because the licensee did not coordinate with all affected work groups so that operations personnel understood the constraints prior to placing the modified system back in service. Inspection Report# : 2016003 (pdf) Significance: Jan 15, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Inadequate Loop Flow Test Procedure The team identified a Green non-cited violation of License Conditions 2.C.7, 2.C.6, and 2.F for Units 1, 2, and 3, respectively, because the licensee had not established criteria for determining when a fire main loop had degraded and had not properly tested all portions of the fire main loop. Specifically, the licensee had not established a differential pressure that would initiate actions to evaluate the cause for a degradation and the licensee had not determined the flow through individual flow paths in their auxiliary and control buildings. The licensee documented these issues in Condition Reports 15 00513 and 16 00686 and initiated actions to correct the procedure and perform the flow test of Page 1 of 8

4Q/2016 Inspection Findings - Palo Verde 3 the individual loops. The team identified a performance deficiency related to the procedure used to test their fire main loop. Specifically, the licensee had not established criteria for determining a degraded fire main loop and had not properly tested all portions of the fire main loop. This performance deficiency was more than minor because it was associated with the protection against external factors attribute (fire) and adversely affected the Mitigating Systems Cornerstone objective to ensure the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to test the fire main loops inside the control/auxiliary building separately and failure to establish appropriate acceptance criteria affected the ability to demonstrate the continued capability to deliver adequate flow and pressure to the fire suppression systems. The finding was screened in accordance with NRC Inspection Manual Chapter (IMC) 0609, Significance Determination Process, Attachment 4, Initial Characterization of Findings, dated June 19, 2012. The inspectors determined that an IMC 0609, Appendix F, Fire Protection Significance Determination Process, dated September 20, 2013, review was required as the finding affected the ability to reach and maintain safe shutdown conditions in case of a fire. Using IMC 0609, Appendix F, Attachment 1, Fire Protection Significance Determination Process Worksheet, dated September 20, 2013, the finding was screened as a Green finding of very low safety significance in accordance with Task 1.4.7, Fire Water Supply, Question A. The inspectors determined that although the licensee failed to test portions of the fire main system in accordance with code requirements, the inspectors determined that at least 50 percent of required fire water capacity would be available based on the testing is done with only one fire pump in service and there are three available fire pumps. Since these fire main loops inside the control/auxiliary building had not been monitored for pressure changes when flow tested since initial testing and nothing caused the licensee to reevaluate the test, the team determined that this failure did not reflect current performance. Inspection Report# : 2015008 (pdf) Mitigating Systems Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Establish Maintenance Activities and Instructions for Gas Turbine Generator Station Blackout Batteries The team identified a Green, non-cited violation of 10 CFR 50.63, Loss of All Alternating Current, which states, in part, The alternate AC power source, as defined in 10 CFR 50.2, will constitute acceptable capability to withstand station blackout provided an analysis is performed which demonstrates that the plant has this capability from onset of the station blackout until the alternate AC source(s) and required shutdown equipment are started and lined up to operate. Specifically, prior to August 5, 2016, the licensee replaced the gas turbine generator station blackout batteries in a modification to address obsolete components, but failed to identify the initial parameters to baseline the batteries and failed to implement a battery testing and maintenance program. In response to this issue, the licensee determined that the batteries continued to satisfy their design function and began to develop the necessary testing and preventive maintenance procedures. This finding was entered into the licensees corrective action program as Condition Report 14-02346. The team determined that failure to implement preventative maintenance activities for the gas turbine generator station blackout batteries since their replacement in 2014 was a performance deficiency. This performance deficiency was more than minor because it was associated with the equipment performance attribute of the Mitigating Systems Page 2 of 8

4Q/2016 Inspection Findings - Palo Verde 3 Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the licensee replaced the gas turbine generator station blackout batteries in a modification to address obsolete components, but failed to identify the initial parameters to baseline the batteries and failed to implement a battery testing and maintenance program. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in a loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding had a crosscutting aspect in the area of problem identification and resolution associated with resolution because the licensee failed to take effective corrective actions to address issues in a timely manner commensurate with their safety significance [P.3]. Inspection Report# : 2016007 (pdf) Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Translate Information from Design Modification into Design Documentation, Operating Procedures, and Operator Training . The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, measures shall be established to assure that applicable regulatory requirements and the design basis, for those structures, systems, and components to which this appendix applies are correctly translated into specifications, drawings, procedures, and instructions. Specifically, prior to August 5, 2016, the licensee did not adequately implement operator training and annunciator response procedures for Design Modification 216914, which resulted in the failure to adequately evaluate the impact on operability for the loss of forced cooling capability for the L31 load center transformer. In response to this issue, the licensee confirmed that the L31 load center was operable, but degraded, based on the remaining life for the transformer insulation when considering the maximum design basis accident load on the transformer and the expected load duration with the cooling fans disabled. This finding was entered into the licensees corrective action program as Condition Report 3-16-12571 and Condition Report 3 13316. The team determined that the failure to adequately update design documentation, operating procedures, and operator training was a performance deficiency. This performance deficiency was more than minor because it was associated with the design control attribute of the Mitigating Systems Cornerstone and affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the failure to update appropriate design calculations, annunciator response procedures, and licensed operator training when Design Modification 216904 was implemented in 1996 contributed to conditions that resulted in Operations preparing an inadequate Immediate Operability Determination when the L31 transformer cooling equipment failed on April 21, 2015. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in the loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding did not have a crosscutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2016007 (pdf) Page 3 of 8

4Q/2016 Inspection Findings - Palo Verde 3 Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Failure to Verify the Ability to Isolate the Safety-Related Condensate Storage Tank from Non-Safety Piping The team identified a Green, non-cited violation of 10 CFR Part 50, Appendix B, Criterion III, Design Control, which states, in part, Measures shall be established to assure that applicable regulatory requirements and the design basis for those structures, systems, and components to which this appendix applies are correctly translated into specifications, drawings, procedures, and instructions. Specifically, prior to August 3, 2016, the licensee failed to establish measures to assure an adequate water level was maintained in the condensate storage tank, failed to establish a time critical action to isolate the condensate storage tank, and failed to establish specific procedures to isolate the condensate storage tank in the event of a tornado. In response to this issue, the licensee initiated the process to revise plant procedures and evaluate associated operator time critical actions. This finding was entered into the licensees corrective action program as Condition Reports 16-13761, 16-12430, and 16 13762. The team determined that failure to verify the ability to isolate the safety-related condensate storage tank from the non-safety portion of the auxiliary feedwater system while preserving enough tank capacity to safely shutdown was a performance deficiency. This performance deficiency was more than minor because it was associated with the equipment performance attribute of the Mitigating Systems Cornerstone and adversely affected the cornerstone objective of ensuring the availability, reliability, and capability of systems that respond to initiating events to prevent undesirable consequences. Specifically, the licensees failure to ensure timely isolation of the condensate storage tank would adversely affect the capability to safely shutdown the plant using the condensate storage tank and safety-related auxiliary feedwater system. In accordance with Inspection Manual Chapter 0609, Appendix A, The Significance Determination Process (SDP) for Findings At-Power, dated June 19, 2012, Exhibit 2, Mitigating Systems Screening Questions, the finding was determined to have very low safety significance (Green) because it was a design or qualification deficiency that did not result in a loss of operability or functionality; did not represent an actual loss of safety function of a system or train; did not result in the loss of a single train for greater than technical specification allowed outage time; did not result in the loss of one or more trains of non-technical specification equipment; and did not screen as potentially risk-significant due to seismic, flooding, or severe weather. This finding did not have a crosscutting aspect because the most significant contributor did not reflect current licensee performance. Inspection Report# : 2016007 (pdf) Significance: Sep 01, 2016 Identified By: NRC Item Type: NCV Non-Cited Violation Pipe Welds Not Incorporated into the Inservice Inspection Program The team identified a Green, non-cited violation of 10 CFR 50.55a(g)4, Inservice Inspection Standards Requirement for Operating Plants, which states, in part, Throughout the service life of a pressurized water-cooled nuclear power facility, components that are classified as ASME Code Class 1, Class 2, and Class 3 must meet the requirements set forth in Section XI of the ASME Code. The ASME Code, Section XI, Article IWA-2610, requires that a reference system be established for all welds and areas subject to a surface or volumetric examination. Specifically, prior to August 8, 2016, for two welds located in an ASME Code, Section XI, Class 3, suction line between the condensate storage tank and the non-safety-related auxiliary feedwater pump, a weld reference system was not established. In response to this issue, the licensee reclassified the subject welds and scheduled weld examinations to ensure potential cracks would be detected. This finding was entered into the licensees corrective action program as Condition Report 16-13150. The team determined that the licensees failure to establish a weld reference system for two welds in the suction line between the condensate storage tank and the startup feed pump system was contrary to the ASME Code, Section XI, Article IWA-2610, and was a performance deficiency. This performance deficiency was more than minor because the Page 4 of 8

4Q/2016 Inspection Findings - Palo Verde 3 finding, if left uncorre]]