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{{Adams
#REDIRECT [[L-14-122, Annual Financial Test for a Parent Company Guarantee]]
| number = ML14087A454
| issue date = 03/28/2014
| title = Annual Financial Test for a Parent Company Guarantee
| author name = Halnon G H
| author affiliation = FirstEnergy Nuclear Operating Co
| addressee name =
| addressee affiliation = NRC/Document Control Desk, NRC/NMSS, NRC/NRR
| docket = 05000334, 05000440, 07200014, 07200069, 07201043
| license number = DPR-066, NPF-058
| contact person =
| case reference number = L-14-122
| document type = Letter
| page count = 7
}}
 
=Text=
{{#Wiki_filter:FENOCFtB Enqgy twc,eat Opwngco.p"ny--
341 White Pond Dr.Akron, Ohio 44320March 28,2014 L-14-122ATTN: Document Control DeskU.S. Nuclear Regulatory Commission Washington, DC 20555-0001
 
==SUBJECT:==
Beaver Valley Power Station, Unit No.
1Docket No.
50-334, License No. DPR-66Beaver Valley Power Station ISFSIDocket No.
72-1043 Davis-Besse Nuclear Power Station ISFSIDocket No.72-14Perry Nuclear Power PlantDocket No. 50-440, License No. NPF-58Perry Nuclear Power Plant ISFSIDocket No.
72-69Annual Financial Test for a Parent Company Guarantee10 cFR 30 Enclosed is a copy of the annual FirstEnergy Corp. (FE) financial test that provides assurance that FE can support parent company guarantees (PGs) associated with the decommissioning funding for Beaver Valley Power Station, Unit No. 1 (BVPS-1);Davis-Besse Nuclear Power Station (DBNPS) Independent Spent Fuel StorageInstallation (ISFSI); Perry Nuclear Power Plant (PNPP); and Perry Nuclear PowerPlant lSFSl. The test was prepared in accordance with 10 CFR 30, Appendix A,"Criteria Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable Assurance of Funds for Decommissioning." The PGs include a$11 million PG for the DBNPS and PNPP lSFSls and a $125 million PG for BVPS-1 and PNPP. The test also provides assurance for a $155 million replacement PG forthe current
$125 million PG for the power plants, and a new $9.5 million PG for the Beaver Valley Power Station (BVPS) lSFSl. The
$155 million replacement PG for BVPS-1 and PNPP, and the
$9.5 million BVPS ISFSI PG are expected to be in placeby the end of the second quarter 2014.This submittal provides the requisite 30-day notification to the Nuclear Regulatory Commission regarding amending the
$125 million PG in accordance with Section 14 of the PG.
Beaver Valley Power Station, Unit No. 1 Beaver Valley Power Station ISFSI Davis-Besse Nuclear Power Station ISFSIPerry Nuclear Power PlantPerry Nuclear Power Plant ISFSI L-14-122Page 2 The enclosure also includes a report by the FE independent accountants of their reviewof the FE financial test.There are no regulatory commitments contained in this submittal. lf there are any questions or if additional information is required, please contact Mr. Thomas A. Lentz, Manager - Fleet Licensing, at (330) 315-6810.Director, Fleet Regulatory Affairs
 
==Enclosure:==
 
FirstEnergy Corp. Parent - Guarantee of Funds for Decommissioning:
Letter from Chief Financial Officer to Demonstrate Financial Assurance cc: NRC Region lAdministratorNRC Region lll AdministratorNRC Resident Inspector (Beaver Valley)NRC Resident Inspector (Davis-Besse)
NRC Resident Inspector (Perry)NRC Project Manager (Beaver Valley)NRC Project Manager (Davis-Besse)NRC Project Manager (Perry)Director BRP/DEPSite BRP/DEP RepresentativeUtility Radiological Safety Board March28,2014 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-000 I Subject; FirstEnergy Corp.
Parent - Guarantee of Funds for Decommissioning:Letter from Chief Financial Offrcer to Demonstrate Financial Assurance I am the Senior Vice President and Chief Financial Officer of FirstEnergy Corp., 76 South Main Street, Akron Ohio 44308, an Ohio corporation. This letter is in supporl of this firm's use of the financial test todemonstrate financial assurance, as specified in l0 CFR Part 50 and CFR Part 72.This firm is qualified to provide parent company guarantees, up to $175.5 million for the decommissioning costs of the following facilities owned or operated by subsidiaries of this firm. The current cost estimate and the amount to be guaranteed are shown for the following facilities:
Name of Facility Beaver Valley Power Station. UnitNo. I License No. DPR-66 Perry Nuclear Power Plant License No. NPF-58 Davis-Besse Nuclear Power Station Independent Spent Fuel Storage Installation DocketNo.
T2-14 Perry Nuclear Power Plant Independent Spent FuelStorage Installation Docket No. 72-69 Beaver Valley PowerStation Independent Spent Fuel Storage Installation Docket No. 72-1043 Shippingport, PA $ 510,139,000 Location of Facility Perry, OHOak Harbor, OH Current Cost Estimates$ 682,020,000
$ 4,639,427 Amount to be Guaranteed
$ 90,000,000
$ 65,000,000
$ 4,700,000 Perry, OH$ 6,077,790$
6,300,000Shippingport, PA
$ 9,104,297$
9,500,000 FirstEnergy Corp. is required to file a Form l0-K with the U.S. Securities and Exchange Commission forthe latest hscal year.The fiscal year of FirstEnergy Corp. ends on December 3 I 't. The figures for the following items (Financial Test II: Altemative II) marked with double asterisks are derived from FirstEnergy Corp.'s independentlyaudited, year-end financial statements and f,ootnotes for tlte latest cotnpleted fiscal year ending December3 r. 2013.I lqeby certifr that the content of this letter is true and correct to the best ofmy knowledge.
Senior Vice President and Chief Financial Offrcer, FirstEnergy Corp.March28,2014 FINANCIAL TEST: ALTERNATIVE II (r0 CF'R part 30 App. A. Section II A.2.)FirstEnergy Corp. Parent Guarantee of Funds for DecommissioningDollars in Millions l. Guaranteed amount for the following Units:Beaver Valley Power Station, Unit No. l, License No. DPR-66Beaver Valley Power Station, ISFSI Perry Nuclear Power Plant, License No. NPF-58 Davis-Besse Nuclear Power Station, ISFSI Perry Nuclear Power Plant, ISFSI
: 2. Current bond rating ofmost recent unsecured issuance ofthis firm RatingName of Rating ServiceDate of issuance of bondDate of maturity of bond*+5. Tangible Net Worth*6. Total assets in the United States (required only ifless than 90 percentof firm's assets are located in the United States) 4,$ l7s.s Baa3 Moody's 315120t3 3lt5/2018
&3trs12023$ 2,130 7. Is Line 5 at least
$21 million?8. Is line 5 at least 6 times line l?9.See line 9 belowYgs No X X X 10.I l.Are at least 90 percent of the frm's assets located in the United States?If not, complete line 10.Is line 6 at least 6 times line l?Is the rating specified on ljne 2 "BBB" or better (if issued by Standardand Poor's) or "Baa" or better (if issued by Moody's)?
* Denotes figures derived from financial stat*ments.
** Tangible Net Worth is defined as FirstEnergy Corp. total equity minus goodwill, patents, hademarks and copyrights; and FirstEnergy Corp.'s net book value for Beaver Valley Power Station, Unit No. I and 2, Perry Nuclear Power Plant and Davis-Besse Nuclear Power Station.
FIRSTENERGY CORP.YEAR ENDED DECEMBER 3I, 2013 Dollars in MillionsLine Number in CFO's LetterTotal Equity Less: Goodwill, Patents, Trademarks and Copyrights Other Intangible Assets Net Book Value Beaver Valley Power Station, Unit No. INet Book Value Beaver Valley Power Station, Unit No, 2 Net Book Value Perry Nuclear Power Plant Net Book Value Davis-Besse Nuclear Power Station 5 - Tangible Net WorthPer Financial Statements
$ 12,695 s 6,447$ 807$q$$588 407$ 2,130
_3 wcReport of Independent AccountantsTo FirstEnergr Corp.:l{e have performed t}e procedures enumerated below, which were agreed to by management of FirstEnerry Corp. (the Company) solely to assist you in waluating the Company's compliance with the financial test as of December 31, 2013 performed in accordance with the U.S. Nuclear Regulatory Commission (the "NRC") Regulations 10 C.F.& Section 5o.75(e)GXiiiXB) and ro C.F.& Section Zz.go(eXz) as mandated by the Parent Company Guarantees.
Management is responsible for the Companls compliance with those requirements. This agreed-upon procedures engagement wasconducted in aecordance with attestation standards established by the American Institute of CertifiedPublic Accountants.
The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding tle sufficiency of the procedures described below either for the purpose for which this report has been requested or for any otherpurpose.
Forthe purpose of this repot, we have: r. Read the letter, dated March 28, 2oL4, from your Senior Vice President and Chief Financial Officer to the NRC regarding the $IZS.S million Parental Guarantees and performed the following procedures, which were applied as explained below:A. Traced and agreed the amounts in the column "Per Fhancial Statements", to a schedule prepared by the Company from its audited financial statements noting no differences.
B. Traced and agreed the amount in ttre column "Per CFO's Letter" to line item *5 in theCompany's Financial Test: Alternative II.C. Recomputed the Tangible Net Worth by subtracting the Company's goodwill, patents, trademarks, copyrights; and FirstEnerry Corp.'s net book value of Beaver Valley Power Station, Unit No. r and z, Davis-Besse Nuclear Power Station and PerryNuclear Power Plant from the Company's stockholders' equity noting no differences.
D. Inquired of the Vice President, Controller and Chief Accounting Officer regarding whether any off balance sheet transactions exist that could materially adversely affectthe ability of the Company to pay decommissioning costs. He responded that all material off-balance sheet transactions have been disclosed in the Company's financialstatements as filed in its zor3 Annual Report on Form 1o-K and he does not believethat any of the off-balance sheet transactions will materially adversely affect theCompany's ability to pay decommissioning costs. We did not perform any ftrrther prccedures to substantiate management's response.
E. We compared the bond ratings per line z of the Letter to information obtained as ofMareh 28,2oL4 from an external, publicly available source as follows:
Ratins ner line z of the Letter Ratins per external sourceE:rternal Source Baag Baa3 Moodt's We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion.
Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.PricewaterhouseCoopers LLP, zoo Public Square, tSth Floor, Cleueland, OH 44tt4-z3ot T: (zt6) 875 3ooo, F: (zt6) 566 7846,www.pwc.com/us This report is intended solely for the information and use of management of ttre Company and is not intended to be and should not be used by anyone other than these specified parties.{ar**n qr*-L-V-r,* "r/PricewaterhouseCoopers LLP March e8, zor4}}

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