ML062080170
| ML062080170 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, Perry |
| Issue date: | 12/11/2006 |
| From: | Thomas Wengert NRC/NRR/ADRO/DORL/LPLIII-2 |
| To: | Leidich G FirstEnergy Nuclear Operating Co |
| Campbell S, NRC/NRR/DORL, 415-1486 | |
| Shared Package | |
| ML062080312 | List: |
| References | |
| TAC MD2120, TAC MD2121, TAC MD2122, TAC MD2123 | |
| Download: ML062080170 (12) | |
Text
OFFICIAL USE ONLY - PROPRIETARY INFORMATION December 11, 2006 Gary R. Leidich President and Chief Nuclear Officer FirstEnergy Nuclear Operating Company Mail Stop A-GO-19 76 South Main Street Akron, OH 44308
SUBJECT:
SUPPLEMENT TO THE DECEMBER 16, 2005, SAFETY EVALUATION FOR THE NRC ORDER APPROVING THE DIRECT LICENSE TRANSFERS FOR BEAVER VALLEY POWER STATION, UNITS 1 AND 2, DAVIS-BESSE NUCLEAR POWER STATION, UNIT NO. 1, AND PERRY NUCLEAR POWER PLANT, UNIT NO. 1 (TAC NOS. MD2120, MD2121, MD2122 AND MD2123)
Dear Mr. Leidich:
By letters to the Nuclear Regulatory Commission (NRC) dated May 30 and August 15, 2006, you provided certain financial information regarding FirstEnergy Nuclear Generation Corp.s (FENGenCos) projected costs and revenues for 2006 through 2010. This information revised the projections submitted in the applications dated May 18 and June 1, 2005, as supplemented by letters dated July 15 and October 31, 2005, requesting approval of the direct transfers of the facility operating licenses for Beaver Valley Power Station, Units 1 and 2, Davis-Besse Nuclear Power Station, Unit No. 1, and Perry Nuclear Power Plant, Unit No. 1, to the extent held by Pennsylvania Power Company, Ohio Edison Company, OES Nuclear, Inc., the Cleveland Electric Illuminating Company, and the Toledo Edison Company regarding their respective ownership interests in the plants, to FENGenCo.
On December 16, 2005, the NRC issued an Order approving the direct transfers and the associated conforming license amendments. The transfers were consummated that day.
The NRC staff examined the revised financial information to determine whether there would have been different conclusions reached in the safety evaluation (SE) that supported the December 16, 2005, Order had such financial information been available at that time. The NRC staff determined that the conclusions would not have changed and thus remain valid. A Supplemental SE documenting the NRC staffs findings is enclosed.
Notice: Enclosure 2 contains Proprietary Information. Upon separation from Enclosure 2, this letter and Enclosure 1 are DECONTROLLED.
OFFICIAL USE ONLY - PROPRIETARY INFORMATION
OFFICIAL USE ONLY - PROPRIETARY INFORMATION G. Leidich The non-proprietary version of the supplemental SE is available for public inspection in the NRCs Public Document Room and accessible electronically from the Agencywide Documents Access and Management Systems Electronic Reading Room.
Sincerely,
/RA/
Thomas J. Wengert, Project Manager Plant Licensing Branch III-2 Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation Docket Nos. 50-334, 50-412, 50-346 and 50-440
Enclosures:
- 1. Supplement to SE (Non-proprietary)
- 2. Supplement to SE (Proprietary) cc w/o Enclosure 2: See next page OFFICIAL USE ONLY - PROPRIETARY INFORMATION
ML062080312 Letter, Revised Non-proprietary SE: ML062080170 Revised Proprietary SE: ML062080300 OFFICE LPL3-2/PM LPL3-2/PM LPL1-1/PM LPL3-2/LA PFPB:BC LPL1-1/BC OGC LPL3-2/BC NAME TWengert:mw SCampbell TColburn EWhitt EMcKenna RLaufer SUttal DCollins DATE 12/11/06 9/23/06 9/26/06 12/11/06 9/22/06 9/26/06 11/27/06 10/4/06
SUPPLEMENT TO THE DECEMBER 16, 2005, SAFETY EVALUATION FOR THE NRC ORDER APPROVING THE DIRECT LICENSE TRANSFERS FOR BEAVER VALLEY POWER STATION, UNITS 1 AND 2, DAVIS-BESSE NUCLEAR POWER STATION, UNIT NO. 1 AND PERRY NUCLEAR POWER PLANT, UNIT NO. 1 DOCKET NOS. 50-334, 50-412, 50-346 AND 50-440 By letters to the Nuclear Regulatory Commission (NRC) dated May 18 (Agencywide Documents Access and Management System (ADAMS) Accession Number ML051450431) and June 1, 2005 (ADAMS Accession Number ML051570371), as supplemented by letters dated July 15 (ADAMS Accession Number ML052070592) and October 31, 2005 (ADAMS Accession Number ML053120323), FirstEnergy Nuclear Operating Company (FENOC) submitted applications requesting approval of the direct transfers of the facility operating licenses for Beaver Valley Power Station, Units 1 (BVPS 1) and 2 (BVPS 2), Davis-Besse Nuclear Power Station, Unit No. 1 (Davis-Besse), and Perry Nuclear Power Plant, Unit No. 1 (Perry), to the extent held by Pennsylvania Power Company, Ohio Edison Company, OES Nuclear, Inc., the Cleveland Electric Illuminating Company, and the Toledo Edison Company regarding their respective ownership interests in the plants, to FirstEnergy Nuclear Generation Corp. (FENGenCo), a new nuclear generation subsidiary of FirstEnergy Corporation (FirstEnergy Corp.).
The NRC issued an Order on November 15, 2005 (ADAMS Accession No. ML052790510),
approving the direct transfers of the licenses. Subsequent to the issuance of the Order, the NRC staff determined that corrections were needed to the cover letter, Order, conforming amendments for BVPS 2 and Perry, and the non-proprietary and proprietary safety evaluations (SEs). Therefore, the NRC issued a corrected Order on December 16, 2005 (ADAMS Accession No. ML053460182). The December 16, 2005, corrected Order superceded the November 15, 2005, Order.
By letter to the NRC dated May 30, 2006 (ADAMS Accession Number ML061590403), FENOC provided revised financial information associated with its two applications dated May 18 and June 1, 2005. The May 30, 2006, letter stated that FENOC had identified two errors of substance that affected the financial projections submitted as part of the 2005 applications.
First, there was a numerical transposition error in the debt-to-equity ratio in the financial model.
Second, the submittals to the NRC did not comport with an associated submittal to the Federal Energy Regulatory Commission (FERC) regarding FERC Account 411 dealing with a FERC-approved rate structure. Both of these errors resulted in lower 5-year revenue projections than those in the original 2005 applications to the NRC.
Enclosure 1
According to FENOCs May 30, 2006, letter, the inaccurate information submitted in its 2005 applications to the NRC did not have a significant implication for public health and safety and, although specific notification of the NRC was not required, the NRC was contacted on March 30, 2006, and made aware of the errors in the submittals. Furthermore, FENOC stated that the corrected 5-year projected income statements included in the May 30, 2006, letter were independently reviewed by FirstEnergy [Corp.] personnel not involved in preparation of the initial documents to provide a measure of assurance of their accuracy. The May 30, 2006, letter stated that FENOC believes that the NRC staffs finding of adequate financial qualifications for FENGenCo, as described in the NRC SE supporting the NRC Order dated December 16, 2005 (the 2005 SE), remains valid because FENGenCo is projected to continue to earn revenues in excess of its operating and maintenance expenses during each of the 5 years of the 2006 through 2010 projection period. The letter further stated that the $400 million support agreement from FirstEnergy that was described in the original submittals is unaffected by the revised financial projections.
Subsequently, in a letter to the NRC dated August 15, 2006 (ADAMS Accession Number ML062340523), FENOC stated that:
The May 30, 2006 submittal indicated in a footnote to the financial statements that certain accretion costs were being recovered through the Power Supply Agreement (PSA) [with FE Solutions Corp., the proposed intermediate parent of FENGenCo], and therefore, included in the Operating Revenue projections based upon an anticipated application to the Federal Energy Regulatory Commission (FERC). FE [FirstEnergy Corp.] is requesting an adjustment in the FERC-approved rates to include FERC Account 411 (net of FERC Account 419 [decommissioning trust income]) in the rates.
Recent pre-application discussions with FERC have confirmed the anticipated inclusion of FERC Account 411 (net of FERC Account 419). However, FERC has recommended that certain non-cash amounts associated with the asset retirement costs be excluded from the rate base input. The revised pro forma income statements resulted in a less than 10% reduction in the yearly net income [from the levels projected in the May 30, 2006 submittal].
According to the August 15, 2006, letter, FENOC believes that the above-described changes to the FENGenCo financial projections are not significant.
The NRC staff reviewed the May 30 and August 15, 2006, revised financial data submitted by FENOC in relation to the data submitted by FENOC in 2005, which is contained in the 2005 SE.
The table below is the NRC staffs summary of key financial data to show the extent to which revenues and net income have changed from the original projections made by FENOC in 2005 to the latest projections submitted in August 15, 2006. Proprietary financial information is indicated by brackets [ ].
(
SUMMARY
OF) FENGENCO PROJECTED INCOME STATEMENT ($K) 2006 2007 2008 2009 2010 2005 PROJECTIONS Operating Revenue [ ] [ ] [ ] [ ] [ ]
Expenses/Other Income [ ] [ ] [ ] [ ] [ ]
Net Income [ ] [ ] [ ] [ ] [ ]
May 30, 2006 PROJECTIONS Operating Revenue [ ] [ ] [ ] [ ] [ ]
Expenses/Other Income [ ] [ ] [ ] [ ] [ ]
Net Income [ ] [ ] [ ] [ ] [ ]
August 15, 2006 PROJECTIONS Operating Income [ ] [ ] [ ] [ ] [ ]
Expenses/Other Income [ ] [ ] [ ] [ ] [ ]
Net Income [ ] [ ] [ ] [ ] [ ]
The range of net income in the 2005 projections is approximately [ ], compared to the range in the August 15, 2006 projections of approximately [ ]. While the average annual difference between the two sets of projections is about [ ] greater for the 2005 projections, the net income for each of the five years (2006-2010) in the August 15, 2006, projections still indicates revenues projected to be greater than expenses by about
[ ] or more for each year.
Based on the revised financial information submitted by FENOC, and given that the
$400 million support agreement from FirstEnergy is not changed by the revised projections, the NRC staff concludes that the changes in the financial data from the 2005 applications to the August 15, 2006, projections do not have a material impact on the conclusions of the 2005 SE.
Principal Contributor: R. Uleck Date: December 11, 2006
Beaver Valley Power Station, Unit Nos. 1 and 2 cc:
Joseph J. Hagan Lew W. Myers Senior Vice President of Operations Executive Vice President, Special Projects and Chief Operating Officer FirstEnergy Nuclear Operating Company FirstEnergy Nuclear Operating Company Beaver Valley Power Station Mail Stop A-GO-14 Mail Stop A-BV-SGRP 76 South Main Street P.O. Box 4, Route 168 Akron, OH 44308 Shippingport, PA 15077 Danny L. Pace Manager, Site Regulatory Compliance Senior Vice President, Fleet Engineering FirstEnergy Nuclear Operating Company FirstEnergy Nuclear Operating Company Beaver Valley Power Station Mail Stop A-GO-14 Mail Stop A-BV-A 76 South Main Street P.O. Box 4, Route 168 Akron, OH 44308 Shippingport, PA 15077 Jeannie M. Rinckel Commissioner James R. Lewis Vice President, Fleet Oversight West Virginia Division of Labor FirstEnergy Nuclear Operating Company 749-B, Building No. 6 Mail Stop A-GO-14 Capitol Complex 76 South Main Street Charleston, WV 25305 Akron, OH 44308 Director, Utilities Department David W. Jenkins, Attorney Public Utilities Commission FirstEnergy Corporation 180 East Broad Street Mail Stop A-GO-18 Columbus, OH 43266-0573 76 South Main Street Akron, OH 44308 Director, Pennsylvania Emergency Management Agency Manager, Fleet Licensing 2605 Interstate Dr.
FirstEnergy Nuclear Operating Company Harrisburg, PA 17110-9364 Mail Stop A-GHE-107 395 Ghent Road Ohio EPA-DERR Akron, OH 44333 ATTN: Zack A. Clayton P.O. Box 1049 James H. Lash Columbus, OH 43266-0149 Site Vice President FirstEnergy Nuclear Operating Company Beaver Valley Power Station Mail Stop A-BV-SEB1 P.O. Box 4, Route 168 Shippingport, PA 15077
Beaver Valley Power Station, Unit Nos. 1 and 2 cc:
Dr. Judith Johnsrud Environmental Coalition on Nuclear Power Sierra Club 433 Orlando Avenue State College, PA 16803 Director Bureau of Radiation Protection Pennsylvania Department of Environmental Protection Rachel Carson State Office Building P.O. Box 8469 Harrisburg, PA 17105-8469 Mayor of the Borough of Shippingport P.O. Box 3 Shippingport, PA 15077 Regional Administrator, Region I U.S. Nuclear Regulatory Commission 475 Allendale Road King of Prussia, PA 19406 Resident Inspector U.S. Nuclear Regulatory Commission P.O. Box 298 Shippingport, PA 15077
Davis-Besse Nuclear Power Station, Unit 1 cc:
Manager - Regulatory Affairs State of Ohio FirstEnergy Nuclear Operating Company Public Utilities Commission Davis-Besse Nuclear Power Station 180 East Broad Street 5501 North State - Route 2 Columbus, OH 43266-0573 Oak Harbor, OH 43449-9760 Attorney General Director, Ohio Department of Commerce Office of Attorney General Division of Industrial Compliance 30 East Broad Street Bureau of Operations & Maintenance Columbus, OH 43216 6606 Tussing Road P.O. Box 4009 President, Board of County Reynoldsburg, OH 43068-9009 Commissioners of Ottawa County Port Clinton, OH 43252 Regional Administrator U.S. Nuclear Regulatory Commission President, Board of County 801 Warrenville Road Commissioners of Lucas County Lisle, IL 60523-4351 One Government Center, Suite 800 Toledo, OH 43604-6506 Resident Inspector U.S. Nuclear Regulatory Commission The Honorable Dennis J. Kucinich 5503 North State Route 2 United States House of Representatives Oak Harbor, OH 43449-9760 Washington, D.C. 20515 Barry Allen, Plant Manager The Honorable Dennis J. Kucinich FirstEnergy Nuclear Operating Company United States House of Representatives Davis-Besse Nuclear Power Station 14400 Detroit Avenue 5501 North State - Route 2 Lakewood, OH 44107 Oak Harbor, OH 43449-9760 Joseph J. Hagan Dennis Clum Senior Vice President of Operations and Radiological Assistance Section Supervisor Chief Operating Officer Bureau of Radiation Protection FirstEnergy Nuclear Operating Company Ohio Department of Health Mail Stop A-GO-14 P.O. Box 118 76 South Main Street Columbus, OH 43266-0118 Akron, OH 44308 Carol OClaire, Chief, Radiological Branch David W. Jenkins, Attorney Ohio Emergency Management Agency FirstEnergy Corporation 2855 West Dublin Granville Road Mail Stop A-GO-18 Columbus, OH 43235-2206 76 South Main Street Akron, OH 44308 Zack A. Clayton DERR Ohio Environmental Protection Agency P.O. Box 1049 Columbus, OH 43266-0149
Davis-Besse Nuclear Power Station, Unit 1 cc:
Danny L. Pace Senior Vice President, Fleet Engineering FirstEnergy Nuclear Operating Company Mail Stop A-GO-14 76 South Main Street Akron, OH 44308 Manager, Fleet Licensing FirstEnergy Nuclear Operating Company Mail Stop A-GHE-107 395 Ghent Road Akron, OH 44333 Manager, Site Regulatory Compliance FirstEnergy Nuclear Operating Company Davis-Besse Nuclear Power Station Mail Stop A-DB-3065 5501 North State Route 2 Oak Harbor, OH 43449-9760 Jeannie M. Rinckel Vice President, Fleet Oversight FirstEnergy Nuclear Operating Company Mail Stop A-GO-14 76 South Main Street Akron, OH 44308 Mr. Mark B. Bezilla Vice President FirstEnergy Nuclear Operating Company Davis-Besse Nuclear Power Station Mail Stop A-DB-3080 5501 North State Route 2 Oak Harbor, OH 43449-9760
Perry Nuclear Power Plant, Unit 1 cc:
David W. Jenkins, Attorney Dennis Clum FirstEnergy Corporation Radiological Assistance Section Supervisor Mail Stop A-GO-18 Bureau of Radiation Protection 76 South Main Street Ohio Department of Health Akron, OH 44308 P.O. Box 118 Columbus, OH 43266-0118 Resident Inspector's Office U.S. Nuclear Regulatory Commission Zack A. Clayton P.O. Box 331 DERR Perry, OH 44081-0331 Ohio Environmental Protection Agency ATTN: Mr. Zack A. Clayton Regional Administrator, Region III P.O. Box 1049 U.S. Nuclear Regulatory Commission Columbus, OH 43266-0149 2443 Warrenville Road Lisle, IL 60532-4531 Chairman Perry Township Board of Trustees Sue Hiatt 3750 Center Road, Box 65 OCRE Interim Representative Perry, OH 44081 8275 Munson Mentor, OH 44060 Daniel Z. Fisher Transportation Department Manager - Regulatory Compliance Public Utilities Commission FirstEnergy Nuclear Operating Company 180 East Broad Street Perry Nuclear Power Plant Columbus, OH 43215-3793 P.O. Box 97, A210 10 Center Road Joseph J. Hagan Perry, OH 44081 Senior Vice President of Operations and Chief Operating Officer Mayor, Village of North Perry First Energy Nuclear Operating Company North Perry Village Hall Mail Stop A-GO-14 4449 Lockwood Road 76 South Main Street North Perry Village, OH 44081 Akron, OH 44308 Donna Owens, Director Director, Regulatory Affairs Ohio Department of Commerce FirstEnergy Nuclear Operating Company Division of Industrial Compliance 395 Ghent Road Bureau of Operations & Maintenance Akron, OH 44333 6606 Tussing Road P.O. Box 4009 Reynoldsburg, OH 43068-9009 Carol OClaire, Chief, Radiological Branch Ohio Emergency Management Agency 2855 West Dublin Granville Road Columbus, OH 43235-7150 Mayor, Village of Perry P.O. Box 100 Perry, OH 44081-0100
Perry Nuclear Power Plant, Unit 1 cc:
Danny L. Pace Senior Vice President, Fleet Engineering FirstEnergy Nuclear Operating Company Mail Stop A-GO-14 76 South Main Street Akron, OH 44308 Jeannie M. Rinckel Vice President, Fleet Oversight FirstEnergy Nuclear Operating Company Mail Stop A-GO-14 76 South Main Street Akron, OH 44308 Manager, Fleet Licensing FirstEnergy Nuclear Operating Company Mail Stop A-GHE-107 395 Ghent Road Akron, OH 44333 L. W. Pearce Vice President FirstEnergy Nuclear Operating Company Perry Nuclear Power Plant Mail Stop A-PY-A290 P.O. Box 97, 10 Center Road Perry, OH 44081-0097 Manager, Site Regulatory Compliance FirstEnergy Nuclear Operating Company Perry Nuclear Power Plant Mail Stop A-PY-A200 P.O. Box 97, 10 Center Road Perry, OH 44081-0097 Richard Anderson Vice President FirstEnergy Nuclear Operating Company Perry Nuclear Power Plant Mail Stop A-PY-A290 P.O. Box 97, 10 Center Road Perry, OH 44081-0097