RS-05-025, Application for Approval of License Transfers

Application for Approval of License Transfers

ML050670664
Person / Time
Site:	Dresden, Peach Bottom, Byron, Braidwood, Limerick, Quad Cities, Zion, LaSalle
Issue date:	03/03/2005
From:	Jamie Benjamin Exelon Generation Co, Exelon Nuclear
To:	Document Control Desk, NRC/FSME
References
+kBR1SISP20050829, RS-05-025
Download: ML050670664 (24)

Text

Exelon Generation 4300 Winfield Road WaTTeTiville, II_ 60555 RS-05-025 March 3, 2005 U.S. Nuclear Regulatory Commission Attn : Document Control Desk Washington, DC 20555-0001 Braidwood Station, Units 1 and 2 Facility Operating License Nos. NPF-72 and NPF-77 NRC Docket Nos. STN 50-456 and STN 50-457 Byron Station, Units 1 and 2 Facility Operating License Nos. NPF-37 and NPF-66 NRC Docket Nos. STN 50-454 and STN 50-455 Dresden Nuclear Power Station, Units 1, 2, and 3 Facility Operating License Nos. DPR-2, DPR-19 and DPR-25 N RC Docket Nos. 50-10, 50237 and 50049 LaSalle County Station, Units 1 and 2 Facility Operating License Nos. NPF-1 1 and NPF-1 8 NRC Docket Nos. 50-373 and 50-374 Limerick Generating Station, Units 1 and 2 Facility Operating License Nos. NPF-39 and NPF-85 NRC Docket Nos. 50-352 and 50-353 Peach Bottom Atomic Power Station, Units 1, 2, and 3 Facility Operating License Nos. DPR-12, DPR-44 and DPR-56 NRC Docket Nos. 50-171, 50-277, and 50-278 Quad (Ides Nuclear Power Station, Units 1 and 2 Facility Operating License Nos. DPR-29 and DPR-30 NRC Docket Nos. 50-254 and 50-265 Zion Nuclear Power Station, Units 1 and 2 Facility Operating License Nos. DPR-39 and DPR-48 NRC Docket Nos. 50-295 and 50-304 Subject :

Application for Approval of License Transfers 10 CFR 50.80 10 CFR 50.90 In accordance with 10 CFR 50.80, "Transfer of licenses," Exelon Generation Company, LLC

U.S. Nuclear Regulatory Commission March 3, 2005 Page 2 (Exelon Generation) requests NRC consent to transfers of the facility operating licenses for the nuclear generating stations listed above.

Specifically, to the extent necessary, Exelon Generation requests NRC consent to indirect transfers of the licenses for Braidwood Station, Units 1 and 2 (Braidwood); Byron Station, Units 1 and 2 (Byron) ; Dresden Nuclear Power Station, Units 1, 2, and 3 (Dresden) ; LaSalle County Station, Units 1 and 2 (LaSalle) ; Limerick Generating Station, Units 1 and 2 (Limerick) ; Quad Cities Nuclear Power Station, Units 1 and 2 (Quad Cities)

and Zion Nuclear Power Station, Units 1 and 2 (Zion).

In addition, Exelon Generation and PSEG Nuclear LLC (PSEG Nuclear) jointly request NRC consent to indirect and direct transfers of the licenses for the Peach Bottom Atomic Power Station, Units 1, 2, and 3 (Peach Bottom). The indirect transfer relates to Exelon Generation's ownership and operating interests in that station. The direct transfer relates to the transfer of the non-operating ownership interest in that station held by PSEG Nuclear.

All of the proposed license transfers are associated with the pending merger of Exelon Corporation (the parent company of Exelon Generation and referred to as Exelon) and Public Service Enterprise Group (the ultimate parent company of PSEG Nuclear and referred to as PSEG) and the subsequent restructuring of the merged companies. Under the merger agreement, the two companies will combine to create Exelon Electric & Gas Corporation (EEG),

the nation's largest utility. The merger will be accomplished by converting PSEG shares into Exelon shares and is expected to result in PSEG shareholders holding about 32% of EEG.

PSEG will merge into Exelon and upon completion of the merger, Exelon will change its name to Exelon Electric and Gas Corporation. EEG will then restructure its organization. The combined company will have assets of approximately $79 billion and will serve three major metropolitan areas, more than seven million retail electric customers in Illinois, New Jersey, and Pennsylvania, and more than two million gas customers in Pennsylvania and New Jersey.

The Braidwood, Byron, Dresden, LaSalle, Limerick, Quad Cities, and Zion stations are presently owned and operated by Exelon Generation.' Accordingly, Exelon Generation is an NRC licensee for these facilities. Exelon Generation is a wholly-owned subsidiary of Exelon Ventures Company, LLC, which in turn is a wholly-owned subsidiary of Exelon. As a result of the merger, Exelon Generation will remain a wholly-owned subsidiary of Exelon Ventures Company, LLC, and that company will become a wholly-owned subsidiary of EEG. Exelon Generation will continue to be the owner of the stations and the NRC operating licensee. Exelon Generation is requesting the approval of indirect license transfers for these stations, to the extent necessary, solely due to the merger creating EEG.

Exelon Generation is currently the sole owner of Peach Bottom Unit 1, holds a 50% ownership interest in Peach Bottom Units 2 and 3, and is the NRC-licensed operator of all three Peach Bottom units. PSEG Nuclear owns the remaining 50% non-operating interest in Peach Bottom, Units 2 and 3. As a result of the merger there will again be an indirect transfer of the Exelon Generation ownership and operating interests in the three units due to the merger creating EEG Exelon Generation is the sole owner of all of these stations except Quad Cities. MidAmerican Energy Company is the owner of 25% of the Quad Cities station. MidAmerican's non-operating ownership share is not involved in this application.

U.S. Nuclear Regulatory Commission March 3, 2005 Page 3 described above. In addition, Exelon Generation and PSEG Nuclear request NRC consent to the direct transfer of PSEG Nuclear's ownership interest in Units 2 and 3. Following the transfer, Exelon Generation will hold a 100% ownership interest in the Peach Bottom facility and will continue to be the NRC-licensed operator of each unit.

Because all of the referenced facilities will continue to be operated by the Exelon Generation Nuclear Group following the merger, the proposed license transfers will not impact the technical qualifications of the operating licensees. The merger will also bring into the Exelon Generation nuclear organization the Salem Generating Station, Units 1 and 2, and the Hope Creek Generating Station. (This transaction is addressed by a separate NRC license transfer application.) Exelon expects substantial synergies from the merger, both in financial and operational terms. Exelon Generation expects to build upon its strong, successful performance in running the nation's largest nuclear fleet.

The attached application contains the information required by 10 CFR 50.80 to demonstrate that :

(2)

Exelon Generation will not, as a result of the merger, become owned, controlled, or dominated by a foreign corporation or government ; and Exelon Generation will continue to possess the technical and financial qualifications to own and operate these facilities ;

The proposed transfers and restructuring do not raise any other significant safety or NRC regulatory issues.

With respect to the Peach Bottom facility, because of the transfer of the PSEG Nuclear ownership interest, the attached application also includes proposed conforming license amendments. Exelon Generation and PSEG Nuclear request approval of these amendments in accordance with 10 CFR 50.90, "Application for amendment of license or construction permit."

These license amendments involve no significant hazards considerations. The Peach Bottom Plant Operations Review Committee has reviewed and approved the amendment request. In addition, in accordance with 10 CFR 50.91, "State consultation," paragraph (b), appropriate state representatives are being notified.

The merger is conditioned upon, among other things, the approval by shareholders of both companies and a number of regulatory approvals or reviews by federal and state energy authorities. These include, in addition to the NRC, the New Jersey Board of Public Utilities, the Pennsylvania Public Utility Commission, the Illinois Commerce Commission (notice filing only),

the Federal Energy Regulatory Commission, the Securities and Exchange Commission, and either the Department of Justice or the Federal Trade Commission, depending upon which agency reviews the anti-trust aspects of the merger. The companies intend to seek shareholder approval in the second quarter of 2005 and anticipate that the regulatory approvals can be obtained within 12-15 months of its December 2004 announcement date.

To facilitate implementation of the merger and subsequent restructuring, Exelon Generation and PSEG Nuclear are requesting NRC approval of the proposed transfers within six months, to be effective immediately upon issuance. Consistent with past practice, we request the approval to

U.S. Nuclear Regulatory Commission March 3, 2005 Page 4 permit subsequent execution of the merger, restructuring, and the license transfers within a succeeding 12-month period.

If there are any questions regarding these license transfer requests, please contact Kenneth A.

Ringer at (856) 339-2136.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on enjamin -\\Abce President, Licensing and Regulatory Affairs Exelon Generation Company, LLC Attachment :

Application for Consent to License Transfers and Conforming License Amendments

STATE OF NEW JERSEY COUNTY OF SALEM AFFIRMATION 1, Frank Cassidy, being duly sworn, hereby depose and state:

I am Frank Cassidy, Chief Operating Officer, PSEG Nuclear LLC; that I am duly authorized to file this Affirmation with the Nuclear Regulatory Commission ; that I am familiar with the content of the Application for Approval of License Transfers filed herewith ; and that the matters set forth therein with regard to PSEG Nuclear LLC and Peach Bottom Atomic Power Station, Units 2 and 3, are true and correct to the best of my knowledge, information, and belief.

and Sworn to before me Qkn,-, 2005 Expires:

KAREN AYALA NOTARY PUBLIC OF NEW JERSEY ISSION EXPIRES 11/12109 SS

INTRODUCTION APPLICATION FOR CONSENT TO LICENSE TRANSFERS AND CONFORMING LICENSE AMENDMENTS Exelon Corporation (Exelon) is the parent company of Exelon Generation Company, LLC (Exelon Generation). Exelon Generation is currently the licensed owner and operator of Braidwood Station, Units 1 and 2 (Braidwood); Byron Station, Units 1 and 2 (Byron); Dresden Nuclear Power Station, Units 1, 2, and 3 (Dresden); LaSalle County Station, Units 1 and 2 (LaSalle) ; Limerick Generating Station, Units 1 and 2 (Limerick) ; Quad Cities Nuclear Power Station, Units 1 and 2 (Quad Cities);' and Zion Nuclear Power Station, Units 1 and 2 (Zion).

Exelon Generation also owns interests in and operates Peach Bottom Atomic Power Station, Units 1, 2, and 3 (Peach Bottom). Exelon Generation is the sole owner of Peach Bottom Unit 1, a 50% owner of Peach Bottom Units 2 and 3, and the licensed operator of all three Peach Bottom units.

Public Service Enterprise Group (PSEG) 4 the parent company of PSEG Nuclear LLC (PSEG Nuclear). PSEG Nuclear owns the remaining 50%, non-operating interest in Peach Bottom Units 2 and 3.2 In December 2004, Exelon and PSEG announced that they entered into a merger agreement to combine their companies and create Exelon Electric & Gas Corporation (EEG), the nation's largest utility. The merger will be accomplished by converting PSEG shares into Exelon shares and is expected to result in PSEG shareholders holding about 32% of EEG. PSEG will merge into Exelon and upon completion of the merger, Exelon will change its name to Exelon Electric

& Gas Corporation. EEG will then restructure its organization. The merger will create a combined company with total assets of approximately $79 billion serving three major metropolitan areas, more than seven million retail electric customers in Illinois, New Jersey and Pennsylvania, and more than two million gas customers in Pennsylvania and New Jersey.

As a result of the merger, Exelon Generation 4 requesting, to the extent necessary, NRC approval of the following license transfers in accordance with 10 CFR 50.80:

An indirect transfer of Exelon Generation's licenses to own and operate the Braidwood, Byron, Dresden, LaSalle, Limerick, Quad Cities, and Zion stations.

MidAmerican Energy Company is the owner of 25% of the Quad Cities station. MidAmerican's non-operating ownership share is not involved in this application.

PSEG Nuclear is also the majority owner of the Salem Generating Station, Units 1 and 2 (Salem),

the sole owner of the Hope Creek Generating Station (Hope Creek), and the licensed operator of those facilities. Salem and Hope Creek are the subject of a separate application being submitted to the NRC and are not addressed here.

Exelon Generation and PSEG Nuclear jointly request NRC approval of the following license transfer in accordance with 10 CFR 50.80 :

0 With respect to the Peach Bottom station, Exelon Generation and PSEG Nuclear also request N RC approval, in accordance with 10 CFR 50.90, of conforming administrative license amendments (contained in Enclosure 2) to reflect the transfer of the PSEG Nuclear non-operating ownership interest to Exelon Generation.

This application provides the necessary information to support the proposed transfers, and to demonstrate that the transfers are justified and will not lead to any undue risk to public health and safety.

11.

GENERAL INFORMATION An indirect transfer of Exelon Generation's license to own its current shares of the Peach Bottom units and its license to operate those units.

A direct transfer of PSEG Nuclear's share of Peach Bottom Units 2 and 3 to Exelon Generation.

The merger of Exelon and PSEG will further the business objectives of the two companies, creating substantial synergies in both financial and operational terms. The combined company

-- to be named Exelon Electric & Gas Corporation -

will encompass a wealth of executive experience in a new and larger organization, with increased service territory. Exelon Generation will continue to be a leader in the nuclear generation business.

When the merger is effective, John Rowe -

the current Chairman, President and Chief Executive Officer of Exelon -

will become the president and chief executive officer of EEG.

James Ferland -

the current Chairman, President and Chief Executive Officer of PSEG -

will become non-executive chairman of the Board of Directors of EEG. The new Board of Directors will be comprised of directors to be nominated at a ratio of two-thirds by Exelon and one-third by PSEG.

The merger and restructure will be accomplished by a series of transactions. As relevant to this application, the current PSEG Power LLC (PSEG Power) -

a parent of PSEG Nuclear -

will merge into and be survived by Exelon Generation. The PSEG Power subsidiaries -

including PSEG Nuclear -will be dissolved, liquidated, or merged into and survived by Exelon Generation. The PSEG Power business functions will be rolled into corresponding Exelon Generation business units.

(if ultimately deemed more prudent, a direct or indirect PSEG Power subsidiary may be maintained and will be a direct subsidiary of Exelon Generation.)

Exelon Generation is currently a wholly-owned subsidiary of Exelon Ventures Company, LLC, (Exelon Ventures) which in turn is a wholly-owned subsidiary of Exelon. As a result of the merger and restructuring, Exelon Generation will remain a wholly-owned subsidiary of Exelon Ventures. Exelon Ventures will become a wholly-owned subsidiary of EEG. An organization chart for the post-merger company is contained in Enclosure 1 of this application.

Exelon Generation will continue to be the owner of the Exelon interests in the referenced nuclear stations, and will continue to be the NRC licensee with exclusive operating authority for those stations. Exelon Generation is requesting the approval of indirect license transfers for

these stations, to the extent necessary, solely due to the merger creating EEG. Exelon Generation is requesting the approval of the direct transfer of the PSEG Nuclear ownership interests in Peach Bottom Units 2 and 3 to permit the transfer of these interests to Exelon Generation. Following that transfer, Exelon Generation will hold a 100% ownership interest in Peach Bottom and Exelon Generation will continue to be the operator of that station.

Ill.

REGULATORY ISSUES FOR LICENSE TRANSFERS A. Identification and Ownership of the Licensee Exelon Generation will continue to be the NRC licensee for all of the stations addressed in this application. As a result of the transaction, Exelon Generation will become a wholly-owned subsidiary of EEG, which will be headquartered in Chicago, Illinois. The combined holding company will be a public company with shams traded on the New York Stock Exchange. The shares are expected to be widely held -

initially by the current shareholders of Exelon and PSEG.

Exelon Generation will continue to be the NRC licensee and will be headquartered at :

80 Park Plaza Newark, NJ 07102 Exelon Generation's nuclear organization will be headquartered at :

200 Exelon Way Kennett Square, Pennsylvania 19348 The Chief Nuclear Officer and other senior executives of Exelon Generation responsible for the facilities addressed in this application will not change as a result of the merger.

P6 a result of the merger or restructuring, Exelon Generation will not become owned, controlled or dominated by foreign interests. Exelon Generation will remain a U.S. limited liability company that will be a subsidiary of Exelon Ventures, a U.S. limited liability company, which in turn will be a subsidiary of EEG, a U.S. corporation. The majority (if not all) of the directors and officers of EEG, and officers of Exelon Ventures and Exelon Generation will be U.S. citizens.

B. Technical Qualifications of Exelon Generation The technical qualifications of Exelon Generation will not be affected by the merger creating EEG, the restructuring, nor by the acquisition of the PSEG Nuclear share of Peach Bottom Units 2 and 3. The Exelon Generation organizations and personnel presently responsible for all of the referenced nuclear stations will continue to operate and support the stations with no change.

Likewise, Exelon Generation's programs, procedures, and conduct of operations will not be altered for these facilities as a result of the merger.

C. Financial Qualifications of Exelon Generation 1.

Operating Financial Qualifications The proposed merger and proposed transfers, including the transfer of the 50% ownership in Peach Bottom held by PSEG Nuclear to Exelon Generation, will not affect the financial qualifications of Exelon Generation as the licensed owner and operator.

Exelon Generation will continue to own, operate, and market power from a diverse portfolio of nuclear, fossil, and hydroelectric generating units. Exelon Generation will continue to sell electricity to electric utility affiliates and will market electricity pursuant to rate tariffs approved by the Federal Energy Regulatory Commission. Exelon Generation presently meets, and will continue to meet, the financial qualifications requirement of 10 CFR 50.33, "Contents of applications ; general information," paragraph (f)(2) by obtaining revenue from the sale of electricity from the nuclear plants sufficient to cover nuclear operating costs. Exelon Generation's substantial generating assets and revenue steams -- including revenue streams from nuclear units and from fossil and hydroelectric units, as well as revenue from power marketing and other business operations -

also provide assurance of Exelon Generation's ability to cover fixed operating costs associated with a six-month shutdown of one or more of the nuclear un its. 3 Furthermore, based upon the financial stature of the company, Exelon Generation expects to have an investment grade bond rating, which will enable the company to raise additional funds as necessary.

In the license amendment application submitted by Exelon Generation and PSEG Nuclear addressing the direct transfer of the licenses for ownership/operation of the Salem and Hope Creek units (Docket Nos. 50-272, 50-3", and 50054), Exelon Generation and PSEG Nuclear have submitted five-year, post-merger financial projections for Exelon Generation, incorporating the combined generation capacity (nuclear and non-nuclear) to be operated by Exelon Generation. The five year projections cover the first five years after the merger (beginning in 2006) and include: total revenue, total operating expenses, income before taxes, taxes, and net income. The financial information includes assumptions regarding the total generation supply and the price of electricity, as well as a projected balance sheet for Exelon Generation demonstrating the substantial assets of the combined generation business. To the extent even required for the present application, that information is incorporated herein by reference

.4 2.

Decommissioning Funding Assurance The proposed indirect license transfers do not affect the present decommissioning funding assurance provided by Exelon Generation. The sources of decommissioning funding and the With respect to Peach Bottom Units 2 and 3, Exelon Generation and PSEG Nuclear presently have the financial qualifications to be licensees for those units -

based on their respective abilities to cover operating costs by revenues from sales of electricity from the units. Combining the two shares therefore cannot reduce financial qualifications.

The five-year financial projections are proprietary. Exelon Generation and PSEG Nuclear have requested that the proprietary information be withheld from public disclosure pursuant to 10 CFR 2.390. A non-proprietary version was also provided to the NRC on the docket.

status of the decommissioning funds for the stations are unchanged as a result of the merger creating EEG.

With respect to Peach Bottom, the decommissioning funds currently held by PSEG Nuclear for its ownership interest, or the beneficial interest in those funds, will be transferred to Exelon Generation's existing decommissioning trust funds for the respective unit. Therefore, the transfer of the PSEG ownership interest to Exelon Generation will not reduce the total financial assurance for Peach Bottom, Units 2 and 3.

The status of decommissioning funding for Peach Bottom was shown in the most recent decommissioning funding reports submitted by PSEG Nuclear and Exelon Generations and will be updated in status reports, as required by 10 CFR 50.75, "Reporting and recordkeeping for decommissioning planning," paragraph (f), to be submitted by March 31, 2005.

For PSEG Nuclear, the amounts accumulated in the funds at the end of 2002 exceeded the amount needed to be collected by that date to be consistent with the formulas in 10 CFR 50.75(c). The PSEG Nuclear fund is presently fully funded with no further collections through the state regulatory process anticipated. For the present Exelon Generation share, the amounts accumulated in the funds at the end of 2002 also exceeded the amount needed to be collected.

Exelon Generation is continuing to make collections for its existing share, and those collections are unaffected by the proposed transaction.

The proposed conforming license amendments for Peach Bottom, Units 2 and 3 delete specific license conditions relating to the terms and conditions of decommissioning trust agreements. In place of these license conditions, the requirements of 10 CFR 50.75(h)(1) will apply.

3.

Nuclear Insurance Exelon Generation will continue to maintain the financial protection required by 10 CFR 140, "Financial Protection Requirements and Indemnity Agreements," and the property insurance required by 10 CFR 50.54, "Conditions of licenses," paragraph (w) for all the referenced stations.

For Peach Bottom, Exelon Generation will assume the additional pro rata responsibility presently held by PSEG Nuclear with respect to retrospective liability in accordance with 10 CFR 140.21. The financial information discussed above demonstrates the ability of Exelon Generation to meet the additional share of the maximum annual retrospective liability.

D. Restricted Data and Classified Nuclear Security Information This application does not contain any Restricted Data or other classified defense information, and it is not expected that any such information will become involved in the operation of the affected plants. As provided in 10 CFR 50.37, "Agreement limiting access to Classified Information," Exelon Generation will not permit any individual to have access to Restricted Data or National Security Information until the individual has been approved for such access under the provisions of 10 CFR 25, "Access Authorization for Licensee Personnel."

PSEG Nuclear letter to NRC, "NRC Decommissioning Funding Status Report," dated March 25, 2003 ; Exelon Generation letter to NRC, "Report on Status of Decommissioning Funding for Reactors," dated March 31, 2003.

E. Environmental Considerations This application, and the accompanying administrative license amendments for Peach Bottom, are exempt from environmental review because they fall within the categorical exclusion of 10 CFR 51.22, "Criterion for categorical exclusion; identification of licensing and regulatory actions eligible for categorical exclusion or otherwise not requiring environmental review," paragraph (c)(21 I This application does no more than request approvals of indirect and direct license transfers and conforming license amendments for Peach Bottom, Units 2 and 3. Additionally, the proposed license transfers and conforming license amendments do not involve any amendment or other change that would directly affect the actual operation of the facilities involved in any substantive way. The proposed transfers and amendments do not involve an increase in the amounts, or a change in the types, of any radiological effluents that may be allowed to be released off-site, and do not involve any increase in the amounts or change in the types of any non-radiological effluents that may be released off-site. Further, no increase in the individual or cumulative occupational radiation exposure is involved.

F. No Significant Hazards Consideration Consistent with the generic determination in 10 CFR 2.1315, "Generic determination regarding license amendments to reflect transfers," paragraph (a), the proposed license transfers and conforming license amendments for Peach Bottom, Units 2 and 3 involve no significant hazards consideration.

The proposed conforming license amendments for Peach Bottom, Units 2 and 3 also delete specific license conditions relating to the terms and conditions of decommissioning trust agreements. In place M these license conditions, the requirements of 10 CFR 50.75(h)(1) will apply. As stated in 10 CFR 50.75(h)(4), deletion of those license conditions involves no significant hazards consideration.

The transfers and proposed amendments do not involve any change in the design or licensing basis, plant configuration, or operation of the referenced nuclear stations. All Limiting Conditions for Operation, Limiting Safety System Settings and Safety Limits specified in Technical Specifications remain unchanged. Also, the physical security plans, emergency response plans, operator training and requahfickion programs, and the quality assurance plans are not substantively and materially changed by the proposed license transfers and amendments.

Therefore, the proposed approvals do not: (1) involve an increase in the probability or consequences of an accident previously analyzed ; (2) create the possibility of a new or different kind of accident from the accidents previously evaluated ; or (3) involve a significant reduction in a margin of safety.

IV.

OTHER REGULATORY APPROVALS AND SCHEDULE The merger is conditioned upon, among other things, the approval by shareholders of both companies and a number of regulatory approvals or reviews by federal and state energy authorities. These include, in addition to the NRC, the New Jersey Board of Public Utilities, the Pennsylvania Public Utility Commission, the Illinois Commerce Commission (notice filing only),

the Federal Energy Regulatory Commission, the Securities and Exchange Commission, and either the Department of Justice or the Federal Trade Commission, depending upon which agency reviews the anti-trust aspects of the merger. The companies intend to seek shareholder

approval in the second quarter of 2005 and anticipate that the regulatory approvals can be obtained within 12-15 months of its December 2004 announcement date.

To facilitate implementation of the merger, Exelon Generation and PSEG Nuclear are requesting NRC approval of the proposed transfers within six months, to be effective immediately upon issuance and permit subsequent execution of the merger, restructuring, and transfers within a succeeding 12-month period. Exelon Generation will inform the NRC of any significant changes in the schedule.

V.

CONCLUSIONS For the reasons discussed above, the proposed indirect and direct license transfers (and the administrative license amendments for Peach Bottom Units 2 and 3) will not: (1) have any adverse impact on the operation of the nuclear stations ; (2) adversely affect the managerial or technical qualifications of Exelon Generation, the operator of the nuclear stations ; (3) impair Exelon Generation's financial qualifications as the owner and operator of the nuclear stations; or (4) result in any foreign ownership, control or domination of Exelon Generation. Accordingly, the proposed transfers and amendments will not result in any undue risk to public health and safety, will not be inimical to the common defense and security, and will be consistent with the Atomic Energy Act and NRC regulations.

Proposed Corporate Structure of Exelon Electric and Gas and Principal Subsidiaries Enclosure I

xelon Electric & Gas - Post Merger Exelon Enterprises Exelon Ventures Company, LLC Exelon***

Generation Comoanv. LLC AmerGen Energy Company, LLC PSEG Energy Holdings Exelon Electric &

Gas Corporation'*

Exelon Services Commonwealth Edison Company Exelon Energy Delivery PSE&G PECO Energy Company

• Entity names may change at the time of restructuring, but such name changes will not alter the structure as depicted above.

• • Other direct subsidiaries of Exelon and PSEG are not shown as we anticipate the merger will not affect their relative placement in the corporate structure.

• • • Entity that owns the nuclear generating assets of Exelon and will own the nuclear generating assets of PSEG Nuclear.

Peach Bottom Atomic Power Station, Units 2 and 3 Marked Up Facility Operating Licenses Renewed Operating License DPR - 44 Page 1 Page 2 Page 4 Page 5 Renewed Operating License DPR - 56 Page 1 Page 2 Page 4 Page 5 Page 6

EXELON GENERATION COMPANY. LLC ETN.5 PEACH BOTTOM ATOMIC POWER STATION UNIT 2 RENEWED FACILITY OPERATING LICENSE O

The U.S. Nuclear Regulatory Commission (the Commission) having previously made the findings set forth in License No. DPR-44 issued October 25, 1973, has now found that :

s s regulations Chapter other agencies or bodies have been duly made ;

R Renewed License No. DPR-44 2.

Actions have been identified and have been or will be taken with respect to (1) managing the effects of aging during the period of extended operation on the functionality of structures and components that have been identified to require review under 10 CFR 54.21(x)(1), and (2) time-limited aging analyses that have been identified to require review under 10 CFR 54.21(c), such that there is reasonable assurance that the activities authorized by this renewed license will continue to be conducted in accordance with the current licensing basis, as defined in 10 CFR 54.3, for Peach Bottom Atomic Power Station, Unit No. 2, and that any changes made to the plant's current licensing basis in order to comply with 10 CFR 54.29(x) are in accord with the Act and the Commission's regulations ;

The facility will operate in conformity with the application, as amended, the provisions of the Act, and the rules and regulations of the Commission ;

There is reasonable assurance: (1) that the activities authorized by this renewed license can be conducted without endangering the health and safety of the public, and (2) that such activities will be conducted in compliance with the rules and regulations of the Commission Exelon Generation Company is technically quaired andlfie licensee]

financially qualified to engage in the activities authorized by this renewed license in accordance with the rubs and regulations of the Commission ;

The licenseeO satisfied the applicable provisions of 10 CFR Part 140, "Financial Protection Requirements and Indemnity Agreements," of the Commission's regulations ;

The issuance of this renewed license will not be inimical to the common defense and security or to the health and safety of the public; Page 1 Renewed License No. DPR-44

H.

After weighing the environmental, economic, technical, and other benefits of the facility against environmental costs and considering available alternatives, the Commission concludes that the issuance of Renewed Operating License No.

DPR-44 is in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied ; and The receipt, possession, and use of source, byproduct, and special nuclear material as authorized by the renewed license will be in accordance with the Commission's regulations in 10 CFR Parts 30, 40, and 70, including 10 CFR Sections 30.33, 40.32, and 70.23 and 70.31.

2.

On the basis of the forgoing findings regarding this facility, Facility Operating License No. DPR-44, issued October 25, 1973, is superseded by Renewed Facility Operating_

License No. DPR-44, which is hereby issued to the Exelon Generation Compa licensee, to read as follows :

to-MA"O" A

This renewed license applies to the Peach Bottom Atomic Power Station, Unit 2, a single-cycle, forced-circulation boilin Water nuclear reactor and associated equipment (the facility), owned A

and operated by Exelon Generation Company. The facility is located partly in Peach Bottom Township, York County, partly in Drumore Township, Lancaster County, and partly in Fulton Township, Lancaster County in southeastern Pennsylvania and is described in the Final Safety Analysis Report as supplemented and amended and the Environmental Report as supplemented and amended.

Subject to the conditions and requirements incorporated herein, the Commission hereby licenses :

(2)

Exelon Generation Company, pursuant to the Act and 10 CFR Part 70, to receive, possess, and use at any time special nuclear material as reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the Final Safety Analysis Report, as supplemented and amended ;

Exelon Generation Company, pursuant to Section 104b of the Act and 10 CFR Part 50, "Licensing of Production and Utilization Facilities," to sess, use, and operate the facility the designated location in Peach Bottom, York County, Pennsylvania in accordance with the procedures and limitations set forth in this license ;

r

~M?

Exelon Generation Company, pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, possess, and use at any time any byproduct, source, and special nuclear material as sealed neutron sources for reactor startup, sealed sources for reactor instrumentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required ;

(4)

Exelon Generation Company, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to receive, possess, and use in amounts as required any byproduct, source, or special nuclear material without restriction to chemical or physical form for sample analysis or instrument calibration or when associated with radioactive apparatus or components ;

Page 2 Renewed License No. DPR-44

fire protection program without prior approval of the Commission only if those changes would not adversely affect the ability to achieve and maintain safe shutdown in the event of a fire.

ublic Service Electric & Gas Company PSE&G to PSEG Nuclear Lihense Transfer Conditions PSEG Nuclear shall take all necessary steps to ensure that th decommissioning trust is maintained in accordance with the plication, the requirements of the Order Approving Trans r of Li rise and Conforming Amendment, dated August 21, 2 00, and th lated Safety Evaluation dated February 16, 2000.,~

e mmissioning trust agreement shall provide Oat :

u se of assets in both the qualified ai shall be limited to expenses relate issioning of the unit as defi

~ti s and issuances, and as p e ark-i any amendments there etion`- if decommissioning, a may used for any pur t

securities r other obligations of

> thereof, r their successors or assigns, In ad ' ion, except for investments tied or th non-nuclear-sector mutual in y entity owning one or more is h 11 be prohibited.

nts from the trust shall be rustee has first given the a

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fund deco regula licens compl asset Investments in t PSE&G or affiliat shall be prohibited :

to market indexes funds, investments nuclear power plan No disbursemen made by the trus, NRC 30 days disbursemen the trustee r, the Direct The tru resp Offi e

r pay e until th ice of the p or payments ceives prior wri ffice of Nucle s

greement shall not be modi without prior written notification of Nuclear Reactor Regulation.

ustee, investment advisor, or anyone e e investments made in the trust shall adhere prudent investor' standard, as specified in 18 35.32(3) of the Federal Energy Regulatory Comrri regulations.

PSEG Nuclear shall not take any action that would cause PS Power LLC or its parent companies to void, cancel, or diminish the commitment to fund an extended plant shutdown as represented in the application for approval of the transfer of this license from PSE&G to PSEG Nuclear.

(6)

Exelon Generation Company shall provide to the Director of the Office of Page 4 Renewed License No. DPR-44

e Xl~Ilyf19 decommissioning trust agreement for Peach Bottom, Unit 2, at the the transfer of the unit to Exelon Generation Company is effected tbereafter, is subject to the following :

decommissioning trust agreement must be ii ptable to the NRC.

pect to the decommissioning trust fund, inves C

'ties or other obligations of Exelonorpora t

reof, or their successors or assigns s I

ed.

cept for investments tied to mark ind n-nuc ar-sector mutual funds, invest one or re nuclear power plants std a

a trust agreement f bursements orb

-u ee unless tear eacto ent.

e e°i the st agreemen, is ended in any ;~

x notification to the Dir egulation.

a form ents in or be axes or nts in any entity I be prohibited.

>( Peach Bottom, Unit 2, ayments from the trust lie trustee has first given the egulation, 30 days prior c commissioning trust agreement that no disbursements or ade if the trustee receives prior sNRC.

provide that the erial respect without

!ctor of the Office of section of the decommissioning ust agreement the trustee, investment advisor, or yone else n

e investments made in the trust shall adh e to a investor" standard, as specified in 18 CFR 3

.2(a)(3) of deral Energy Regulatory Commission's regulation eneration Company shall take all necessary steps to ensur° he d ommissioning trust is maintained in accordance with the app ' ation for approval of the transfer of the Peach Bottom, Unit 2, nse and the requirements of the Order approving the transfer, and onsistent with the safety evaluation supporting the Order.

that (9

Nuclear Reactor Regulation a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from Exelon Generation Company to its direct or indirect parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of Exelon Generation Company's consolidated net utility plant, as recorded on Exelon Generation Company's books of account.

Exelon Generation Company shall have decommissioning trust funds for Peach Bottom, Unit 2, in the following minimum amount, wher peach Bottom, Unit 2, is transferred to Exeoot Generation Company :

Peach Bottom, Unit 2 and (a)

(b)

(c)

(d) ac With the sec u affiliates prohibit other no owning The decommission must provide that no shall be made by the t Director, Office of Nuc written notice of paym shall further contain a provisio payments from the trust sha written notice of objection The decommissionin agreement cannot b 30 days prior writt Nuclear Reacto The approp shall state directi "prude the F Page 5 Renewed License No. DPR-44

EXELON GENERATION COMPANY LLC DOCKET NO. 50-278 PEACH BOTTOM ATOMIC POWER STATION UNIT 3 RENEWED FACILITY OPERATING LICENSE Renewed License No. DPR-56 The U.S. Nuclear Regulatory Commission (the Commission) having previously made the findings set forth in License No. DPR-56 issued July 2, 1974, has now found that :

B.

Actions have been identified and have been or will be taken with respect to (1) managing the effects of aging during the period of extended operation on the functionality of structures and components that have been identified to require review under 10 CFR 54.21(x)(1), and (2) time-limited aging analyses that have been identified to require review under 10 CFR 54.21(c), such that there is reasonable assurance that the activities authorized by this renewed license will continue to be conducted in accordance with the current licensing basis, as defined in 10 CFR 54.3, for Peach Bottom Atomic Power Station, Unit No. 3, and that any changes made to the plant's currant licensing basis in order to comply with 10 CFR 54.29(a) are in accord with the Act and the Commission's regulations ;

The facility will operate in conformity with the application, as amended, the provisions of the Act, and the rules and regulations of the Commission ;

D.

There is reasonable assurance : (1) that the activities authorized by this renewed license can be conducted without endangering the health and safety of the public, and (2) that such activities will be conducted in compliance with the rules and regulations of the Commission ;,.,

Exelon Generation Compants technically qualified and"tffe hcei seeA financially qualified to engage in the activities authorized by this renewed license in accordance with the rules and regulations of the Commission ;

The licensees w' satisfied the applicable provisions of 10 CFR Part 140, "Financial Protection Requirements and Indemnity Agreements," of the Commission's regulations ;

G.

The issuance of this renewed license will not be inimical to the common defense and security or to the health and safety of the public; Page 1 Renewed License No. DPR-56

H.

After weighing the environmental, economic, technical, and other benefits of the facility against environmental costs and considering available alternatives, the Commission concludes that the issuance of Renewed Operating License No.

DPR-56 is in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied ; and On the basis of the forgoing findings regarding this facility, Facility Operating License No. DPR-56, issued July 2, 1974, is superseded by Renewed Facility Operating License PR-56, which is hereby issued to the Exelon Generation Compan licensees, to read as follows :

The receipt, possession, and use of source, byproduct, and special nuclear material as authorized by the renewed license will be in accordance with the Commission's regulations in 10 CFR Parts 30, 40, and 70, including 10 CFR Sections 30.33, 40.32, and 70.23 and 70.31.

This renewed license applies to the Peach Bottom Atomic Power Station, Unit 3, a single-cycle, forced-circulation boilin water nuclear reactor and associated equipment (the facility), owned and operated by Exelon Generation Company. The facility is oca e partly in Peach Bottom Township, York County, partly in Drumore Township, Lancaster County, and partly in Fulton Township, Lancaster County in southeastern Pennsylvania, and is described in the Final Safety Analysis Report as supplemented and amended and the Environmental Report as supplemented and amended.

B.

Subject to the conditions and requirements incorporated herein, the Commission hereby licenses :

` (2)

Exelon Generation Company, pursuant to the Act and 10 CFR Part 70, to receive, possess, and use at any time special nuclear material as reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the Final Safety Analysis Report, as supplemented and amended ;

Exelon Generation Company, pursuant to Section 104b of the Act and 10 CFR Part 50, "Licensing of Production and Utilization Facilities,,," to ossess, use, and operate the facility

_xat the designated location in Peach Bottom, York County, Pennsylvania in accordance with the procedures and limitations set forth in this license ;

.~.'° A !M1 Exelon Generation Company, pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, possess, and use at any time any byproduct, source, and special nuclear material as sealed neutron sources for reactor startup, sealed sources for reactor instrumentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required ;

(4)

Exelon Generation Company, pursuant to the Act and 10 CFR Parts 30, 40 and 70, to receive, possess, and use in amounts as required any byproduct, source, or special nuclear material without restriction to chemical or physical form for sample analysis or instrument calibration or when associated with radioactive apparatus or components ;

Page 2 Renewed License No. DPR-56

N~W WA Wwz 10

-~.-

rj L

a s

an at :

,her of 00, and alified a nonqualified s relat d to efin by the NRC in its as p ovided in the unit's r o. However, upon defined above, the ose authorized by law.

tie or other obligations of or their successors or assigns, dition, except for investments tied

~r non-nuclear-sector mutual ntity owning one or more 11 e prohibited.

from the trust shall be ee has first given the e ht.

In addition, no m th trust shall be made if notic of objection from eactor regulation.

any material

,Director, cting the NRC Safety Evaluation Report (SER) dated May 23, 1979, and Supplements dated August 14, September 15, October 10 and November 24, 1980, and in the NRC SERs dated September 16, 1993, and August 24, 1994, subject to the following provision :

The Exelon Generation Company may make changes to the approved fire protection program without prior approval of the Commission only if those changes would not adversely affect the ability to achieve and maintain safe shutdown in the event of a fire.

ublic Service Electric & Gas Cam ense Transfer Conditions The dec

2)

3)

4) mmissioning trust agreement shall provide, The funds decom regulatio license an completion assets may se of assets in both the qu hall be limited to expense ssioning of the unit as d and issuances, and ny amendments the ecommissioning ed for any pu Investments in the PSE&G or affiliates shall be prohibited.

to market indexes or o, funds, investment nuclear power pla No disburseme made by the NRC 30 disburse the trus the Dir r

h an ecu ri ere sh S &G o m

n or payment e until the tr notice of the pay nts or payments fro ceives prior writte or, Office of Nuclear R rust agreement shall not be modified i pect without prior written notification to th ffice of Nuclear Reactor Regulation.

G Nucl The trustee, investment advisor, or anyone else d the investments made in the trust shall adhere to a "prudent investor' standard, as specified in 18 CFR 35.32(3) of the Federal Energy Regulatory Commissio regulations.

PSEG Nuclear, shall not take any action that would cause PSEG Page 4 Renewed License No. DPR-56

Exelon Generation Company shall provide to the Director of the Office of Nuclear Reactor Regulation a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from Exelon Generation Company to its direct or indirect parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of Exelon Generation Company's consolidated net utility plant, as recorded on Exelon Generation Company's books. of,.

account.

(7)

Exelon Generation Company shall have decommissioning trust fund h Bottom, Unit No. 3, in the following minimum amount, when peach Bottom, Unit No. 3, is transferred to Exelon Generation Company :

Peach Bottom, Unit No. 3 c:"_

e decommissioning trust agreement for Peach Bottom, Unit No. 3, a th ime the transfer of the unit to Exelon Generation Company is effec d and thereafter, is subject to the following :

T (a) decommissioning trust agreement must be in a form ac c to the NRC.

a c ct to the decommissioning trust fund s or other obligations of Exelon Col~

er f, or their successors or assig Ex

~~t for investments tied to ar-sect mutual funds, invest nts e or more uclear power pla r

agree Lurses a

t

Power, s parent companies to void, ca fFrrinish the commitment to fuTrd-a er s utdown as represented in the n or a the transfer of this lice==~~&G to PSEG Nuclear.

With res the secunt affiliates th prohibited.

non-nucle owning on The decommissioning tr 3, must provide that no did shall be made by the trustee Director of the Office of Nu written notice of paymen shall further contain a payments from the written notice of o The decommi agreement days prio, Nucle c

he ovision tha

`st shall be mad on from the NR d

ning trust agreement mus nnot be amended in any mated ritten notification to the Director o actor Regulation.

stments in tion or all be rket indexes or other in any entity s shall be prohibited.

s nt for Peach Bottom, Unit No.

ents or payments from the trust ess the trustee has first given the eactor Regulation 30 days prior ommissioning trust agreement o disbursements or f the trustee receives prior ovide that the espect without 30 Office of appropriate section of the decommissioning trust a 11 state that the trustee, investment advisor, or anyone directing the investments made in the trust shall adhere to a "prudent investor" standard, as specified in 18 CFR 35.32(a)(3 the Federal Energy Regulatory Commission's regulations.

ement s

f Page 5 Renewed License No. DPR-56

Cxeion the decommis application for approval of the license and the re

. e con '

the sa e s tt with the Peach Bottom, Unit No. 3, sfer, and a

t (10)

Additional Conditions of the Renewed License Updated Final Safety Analysis Report The Updated Final Safety Analysis Report supplement, as revised on January 31, 2003, shall be included in the next scheduled update to the Updated Final Safety Analysis Report required by 10 CFR 50.71(e)(4) following the issuance of this renewed license.

Until that update is complete, the Exelon Generation Company may make changes to the programs described in the supplement without prior Commission approval, provided that the Exelon Generation Company evaluates each such change pursuant to the criteria set forth in 10 CFR 50.59 and otherwise complies with the requirements in that section.

Future Inspection Activities The Exelon Generation Company Updated Final Safety Analysis Report supplement submitted pursuant to 10 CFR 54.21(d), as revised on January 31, 2003, describes certain future inspection activities to be completed before the period of extended operation.

The Exelon Generation Company shall complete these activities no later than July 2, 2014, and shall notify the NRC in writing when implementation of these activities is complete and can be verified by NRC inspection.

Integrated. Surveillance Program The Exelon Generation Company shall implement an NRC staff-approved reactor vessel integrated surveillance program for the extended period of operation which satisfies the requirements of 10 CFR Part 54. Such a program will be implemented through a staff-approved Boiling Water Reactor Vessel and Internals Project program or through a staff-approved plant-specific program.

Before July 2, 2014, the licensee will notify the NRC of its decision to implement the integrated surveillance program or a plant-specific program, and provide the appropriate revisions to the Updated Final Safety Analysis Report Supplement summary descriptions of the vessel surveillance material testing program.

Core Shroud Inspection and Evaluation Guidelines Program The Exelon Generation Company shall implement an NRC staff-approved core shroud inspection and evaluation guidelines program for the extended period of operation which satisfies the requirements of 10 CFR Part 54. Such a program will be implemented through a staff-approved Boiling Water Reactor Vessel and Internals Project program or through a staff-approved Page 6 Renewed License No. DPR-56