ML20059D351

Forwards Decommissioning Financial Assurance Certification Rept Submitted by North Carolina Eastern Municipal Power Agency

ML20059D351
Person / Time
Site:	Harris
Issue date:	08/30/1990
From:	Loflin L CAROLINA POWER & LIGHT CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NLS-90-176, NUDOCS 9009070009
Download: ML20059D351 (41)

Text

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v a- gpgg Carolina Power & Light Company SERIAL: NLS 90 176-10 CFR 50.33 (k)(2).

AUG 3 01990 y United States Nuclear Regulatory Commission 3

-ATTENTION: Document Control Desk i Washington, DC 20555: ,

SHEARON HARRIS NUCLEAR POWER PLANT DOCKET NO. 50 400/ LICENSE NO. NPF 63 DECOMMISSIONING FINANCIAL ASSURANCE-CERTIFICATION REPORT Centlemen:

l In accordance.with Nuclear Regulatory Commission regulations, Carolina Power 6-q Light Company (CP&L) submitted a Decommissioning Financial Assurance Certifi-  !

cation Report on July- 26,1990 for its ownership share of the Shearon Harris  !

Nuclear Power Plant (SHNPP). On the same date, CP&L forwarded the Decom-  !

.missioning Financial Assurance Certification Report for the North Carolina l Eastern Municipal Power Agency, certifying that funds will be available to decommission SHNPP commensurate with its percentage of ownership.

We have since been notified by the NRC Staff that the North Carolina Eastern Municipal Power Agency certification was not received, and is assa. o have been lost in the mail. CP&L hereby submits a duplicate copy of thuc report.

If you have any questions concerning this submittal, please contact Mr. L. I.

Loflin at (919) 546 6242.

Yours very truly, L. in Manag r Nuclear Licens.ng Section LSR/ecc (800HNP)

Attachment cc: Mr. R. A. Becker Mr. S. D. Ebneter Mr. J. E. Tedrow 9009070009 900630 PDR ADOCK 05000400 I PDC

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• Raleigh, N C 27602 M g/ j

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l UNITED STATES OF AMERICA I NUCLEAR REGULATORY COMMISSION l

Reeort and certification Conceranna Financial Assurance for Nuclear Decommisanonina Costs Suhaitted by-i- North Carolina Eastern Municinal Power Acency l (Harris Unit il l=

Pursuant to 10 C.F.R. ' Sections 150. 3 3 (k) (1) and 50.75(b),

North Carolina Eastern Municipal Power Agency (" Power Agency")

hereby submits its Report and Certification concerning' financial assurance for nuclear" decommissioning costs for Unit 1 at the Shearon Harris Nuclear Power Plant (Facility License No. NPF-63).

This Report and Certification describes Power Agency's cost responsibility for decommissioning costs andLsets forth the method selected by Power Agency, pursuant to the1 Commission's Regulations, of providing financial assurance for decommissioning. 1 A. Power Aaency's Cost Resnonsibilitv-for Decommissionina Power Agency is a public body and body corporate and 1 politic organized under the laws of the State of North Carolina for the purpose, among other things, of acquiring, owning and operating facilities for the generation and transmission of electric power and energy. Power Agency is the all requirements bulk power supplier to 32 cities-and towns in eastern North Carolina that have entered into Project Power' Sales Agreements and Supplemental Power Sales Agreements with Power Agency.

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In 1982,. Power Agency! acquired undivided ownership.

interests in certain electric _ generating units that were then in operation or under construction by Carolina Power'& Light Company i

.("CP&L"). Among the generating units in which Power Agency [

acquired undivided ownership interests is Unit 1 at the Shearon Harris Nuclear Power Plant. Harris Unit 1 contains a i

Westinghouse pressurized water reactor nuclear steam supply; system, and has a licensed thermal power rating of 2,775 MWt.

Harris Unit l' began commercial operation on May 2, 1987.

Pursuant to it's joint ownership arrangement with CP&L, Power

Agency acquired a 16.17% undivided ownership interestEin Harris-Unit 1, and is responsible.for 16.17% of the costs of decommissioning that Unit.

'i B. Method of Providino Financial-Assurance for Decommissionina Power Agency hereby certifies that financial assurance  !

for its share of the cost.of decommissioning' Harris Unit 1 is provided in the amount of $20,995,535 (1990; dollars). This- ,

amount represents' Power Agency's 16.174 share of the minimum-financial assurance amount of $129,842,520 for. Harris Unitol.

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The minimum financial assurance amount for1 Harris Unit 1 is equal-Rto the amount'of $99,420,000 (January 1986 dollars) per. unit; '

determined in accordance with the formula set forth in-10 C.F.R.

5 50.75 (c) (1) , escalated to-January 1, 1990 in accordance with'

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the formula set forth in 10 C.F.R. 5 50.75(c) (2) . The t i

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i calculation of these amounts is shown in detail in Appendix A. '

This amount will be recalculated annually.

The method by which Power Agency will provide financial

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assurance for its share of the cost of decommissioning Harris Unit 1 is the establishment of an external sinking fund into

.,t whinh deposits will be made annually. This external sinking fund has been established-in the form of a decommissioning trust fund:- i the Harris' Unit No. 1 Decommissioning Trust Fund. This trust fund is established under the terms of a Decommissioning Trust Agreement effective as of June 29, 1990 between Power Agency and-Wachovia Bank & Trust Company, N.A. of Winston-Salem, North Carolina ("Wachovia")'. A copy of the Decommissioning. Trust Agreement is attached as Appendix B. .Wachovia is a national bank having authority to act as a trustee, and its trust operations are regulated by the office of the comptroller of the currency.

The Decommissioning Trust Agreement was executed on Power l Agency's behalf by its Chairman and' Secretary-Treasurer, each_of 'I l

b whom was duly authorized by Resolution R-9-90 adopted by Power [

J Agency's Board of Commissioners on June 27,11990, which '

resolution is attached as Appendix C. Section 8.2 of the Decommissioning Trust Agreement describes the " Permitted t -

Investments" in which trust' fund monies may be invested. Power l

Agency intends that?any such investments shall satisfy.the  !

criteria stated.in Section 2.2.4 of the NRC's Regulatory j l

Guide'l.159, " Assuring'the Availability of Funds for j Decommissioning Nuclear Reactors" (prepublication release of May, d a

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1990). Attached as Appendix D is a copy of the opinion of Poyner-

& Spruill, counsel oto Power Agency, to the ef fect that, under North Carolina law, assets in the Decommissioning Trust Funds should not be subject to claims of creditors of the-trustee, ^

Power Agency or a third party entitled to payment from a l Decommissioning Trust Fund, except to the extent that such creditors were entitled to payuent from the Decommissioning Trust Fund.

Power Agency will make-deposits into the Decommissioning-Trust Funds at least annually. The first such(deposit will be made on or before December 31, 1990.. Attached as Appendix E is the schedule of deposits that.will implement the method of' l providing financial assurance for. decommissioning described, above. The assumptions supporting this schedule of deposits are  ;

set forth in Appendix E. As shown_in Appendix--E, these deposits (and investment earnings) are projected to result-in sufficient  !

monies being on deposit to meet _ Power Agency's share of the-minimum financial assurance amount for Harris Unit 1, escalated' L to the date on which the operating license for Harris' Unit 1.

expires. (The calculation of the minimum-financial assurance l amount, escalated to-the month in which the operating license for Harris Unit 1 expires, is shown onLAppendix A.) At-least every five years, Power Agency will recalculate-the schedule of annual 4 deposits to reflect the effects of actual experience and changes in projected values for inflation and fund earnings. '

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C. Further Informatio'n ,

Any additional information concerning the subject matter  ;

of the foregoing Decommissioning Report and Certification may be t

obtained by contacting:

'Mr. William H..Batt Assistant Secretary - Treasurer North Carolina Eastern Municipal Power Agency P.O. Box 29513-Raleigh, North Carolina 27626-0513 Telephone: (919)'832-9924 Submitted this '

day of July, 1990.

't NORTH CAROLINA. EASTERN MUNICIPAL POWER AGENCY-(A

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' Report and Certification Concerning F,'nancial Assurance i for Nuclear Decommissioning' Costs ,

submitted by North Carolina Eastern Municipal Power Agency (Harris Unit 1)_

LIST OF APPENDICgg Appendix A Calculation of Minimum Financial-Assurance Amount for Harris Unit'l'.

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Appendix B A copy of;the Decommissioning Trust Agreement between North Carolina Eastern- ,

Municipal Power Agency and.Wachovia Bank

& Trust Company,.N.A.

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Appendix C A copy of Resolution R-9-90 of Power Agency's. Board of Commissioners ~(adopted June 27, 1990)..

Appendix D Opinion of Poyner & Spruill, counsel =to Power Agency, concerning the.

Decommissioning Trust Funds.

Appendix E Schedule of Deposits:to the DecommissioningtTrust Funds.

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Appendix A- .

calculation-of Minimum-Financial Assurance Amount.

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, Appendix ' A' NORTH CAROLINA EASTERN.MUNTCIPAL POWER AGENCY -

Calculation of Minimum Financial Assurance.

Amount for Harris Unit No. 1 r

-A. Minimus Financial Assurance Amount'in 1990 Dollars

1. NRC minimum in January 1986 dollars (10 C.F.R.$. 50.75 (c) (1)) for a PWR equal to 2,775 MWt = $[75~ + .0088P) million, where P = MWt, = i

$99,420,000

2. 1986 amount escalated ~to January 1990:

a. $99,420,000 times adjustment factor e

b. Adjustment factor' from 1986.~ base values (10 C.F.R.5 50.75 (c)(2)) =

.65L + .13E + .22B,'where r

(1) L = 147.3/127.7 =:1.15 (ii) E = .58P + .42F,'where P = 113.8/119.3 = .95' F = 68.1/82 = .83

(.58 * .95) + (.42 * .83) = .90 (iii) B.= 2.007/1 = 2.007 (iv) Factor = (.65'* 1.15) + (.13 *;.90) +-(.22

• 2.007)'= 1.306

c. January 1990 amount = $99,420,000'* 1.306 = 8129,842,520

d. Power Agency's 16.17% share = $20,995,535 B. Minlaum Financial Assurance Amount. Escalated to Date _ of Expiration of Operating License

1. $20,995,535 times adjustment factor

2. ' Adjustment factor = (1+E)D,'where (1). E = escalation factor of-5.0% per year (ii) n = period in years froa January 1, 1990 to October 24, 2026 = 36.81 (iii) Factor = (1 + .05) 36.81 = 6.0253

3. October 24, 2026 amount = $20,995,535

• 6.0253 = $126,504,000 (B6F/667)

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Horrio Unit 1 Appendix B i A copy of the Decommissioning Trust Agreement between North Carolina Eastern Municipal'. Power Agency and Wachovia Bank &-Trust Company, N.A.

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CERTIFICATE ,;

I, William H. Batt, Assistant Secretary-Treasurer of North .

Carolina Eastern Municipal Power Agency (" Power -Agency"), hereby certify that: I am charged with the duty of. keeping and.have {

custody. of the minutes ~ and official records of Power Agency; attached hereto is a full, true and complete copy _ of the Decommissioning Trust -Agreement - approved by the Board of .

Commissioners (the " Board") of Power Agency at a regular meeting of the Board duly called 'and -held on June 27, 1990;. and said Decommissioning Trust Agreement has not been a'm ended, modified, -

i superseded or repealed and is in full force and-effect'as of the date hereof. -1 IN WITNESS WHEREOF, I have hereunto set my hand and the seal I of Power Agency this '/* day of July, 1990. ^

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William-H. Batt i Assistant Secretary-Treasurer

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(SEAL)

Attachment:

Decommissioning Trust Agreement l 1

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.s DECOMMISSIONING TRUST AGREEMENT THIS TRUST AGREEMENT (" Agreement").made and entered into this h day of June, 1990, effective as of.the 29th day of June, 1990, by and between NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY, a public body and body corporate and politic organized and existing I un'd er and by virtue of the ~ 1aws of the State of North Carolina

("the Power Agency"), as Grantor, and -WACHOVIA BANK &- TRUST COMPANY, N.A., a banking corporation having trust powers with its principal office located in Winston-Salem, North Carolina (the l

" Trustee"), as Trustee.

HIIHE&&EIH THAT WHEREAS, the Power Agency is the owner of certain '

undivided ownership interests in and co-licensee of each .of the i

nuclear power plants and associated facilities more_specifically identified in Article III, hereof; and.

WHEREAS, the plant and associated facilities in'which the I 1

Power Agency has undivided ownership interests are subject to the jurisdiction of the United States Nuclear Regulatory Commission (the "NRC"), an agency of the United States Government; and WHEREAS, pursuant ' to the Atomic Energy Act of. 1954, as amended, and the Energy Reorganization'Act of 1974, the NRC.has promulgated regulations in Title 10, Chapter.1 of the code of Federal Regulations,' Part 50, which require that a holder. of, or an .

applicant for, a license to operate a nuclear power plant provide certain financial assurance that funds will be available when needed for required decommissioning costa and. activities; and b

4 WHEREAS,-- the ' Power Agency, in order- to comply 'with the ,

foregoing regulations, among other reasons, desirer, to establish this trust and-to place-funds hereunder for future decommissioning.

cok and activities for the Power Agency's undivided ownership' interests in the plants and associated facilities hereinafter  !

described; and i WHEREAS, the Power Agency has selected'the Trustee to act as- i l

the Trustee' hereunder; and i

WHEREAS, the Trustee is willing to act-and serve as Trustee-hereunder upon the teras, provisions and conditions hereinaf ter set forth; NOW, THEREFORE, in consideration of - the premises and the mutual covenants herein contained, the Power Agency.hereby agrees to convey, and the Trustee hereby agrees to accept, all that i property specifically set forth and described in Schedules A, B and i

C attached hereto and by reference made a part hereof, to have and hold the same in trust for the uses and purposes and subject to the I terms, provisions, conditions and powers hereinafter set forth.

ARTICLE I TRANSFER AND' ACCEPTANCE 1.1 Transfer to Trustaa. The Power Agency hereby grants,.

releases,. assigns, transfers, conveys and delivers unto the Trustee-all of that property specifically set forth and . described in Schedules "A" through "C" attached . hereto and by reference-incorporated herein and made a part hereof, which Schedules bear

the signature'of the PowerLAgency and the Trustee, to have and to hold the same, in trust, for the uses and purposes-and subject to -

the terms, provisions, conditions and powers hereinaf ter set forth.

1.2 'Accentance by Trustee. The Trustee hereby acknowleedges receipt of all that . property described in and on Schedules "A" through "C", all of said property being sometimes hereinafter referred to as the " Trust _ Estate" or " Trust Property," and the Trustee hereby agrees to hold, manage and distribute the!same as from cime to time constituted, upon the ~ terms,- provisions and conditions hereinafter set out.- The Power" Agency may also, from 4 r

time to time .and at any time- hereaf ter, contr'ibute additional property to the Trustee to be held under the terms hereof, subject to the provisions of Section-5.2 of this Agreement.

1.3 Instruments of Further Assurance. The Power Agency will, upon reasonable request-of the Trustee, execute, acknowledge and.

deliver such further instruments and do such further. acts as may be I necessary or proper to transfer any of the property-intended to_be .

covered hereby and to vest in the Trustee, its successors and assigns, the Trust Property.

1 ARTICLE II DEFINITIONS 2.1 .certain Taram Defined. For all~ purposes of this Agreement, unless the - context otherwise requires, the following terms shall'have the-following meanings:

(a) " Agreement, " Trust Agreement" and the terms " hereof",  ;

"herein," " hereto" and: " hereunder," when used in this Agreement, t

shall mean and include this Agreement as the same may.from-time to time be amended, modified or supplemented.

(b) " Authorized Rs.presentative" shall 4 mean- the persons' designated pursuant to Section 8.1 hereof.

(c) " Power Agency"- shall' mean North ' Carolina ^ Eastern-Municipal Power Agency, a public body and ' body corporate and-i politic organized and existing under.and by virtue of the laws of -

the State of North Carolina, and' its, successors or ansigns.

(d) " Code" shall mean tho' Internal: Revenue Code of 1986, as

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the same may.be amended from time-to time.

i' (e) " Decommissioning' Costs" shallEmean the: Qualified costs directly or indirected incurred , or to be incurred by the Power Agency in the future with respect to decommissioning of the Plants s and associated facilities hereinafter described, as provided by Article 22 of the Operating and Fuel Agreement between the Power Agency and Carolina Power & Light Company, dated" July-30, 1981.

(f) " Disbursement Certificate" shall mean a. document properly ,

completed and executed by an Authorized Representatiive of, the Power Agency and delivered to the Trustee, certifying;that the amounts i shown therein to be paid are Qualified Costs incurred hereunder, in -

the form of Exhibit A hereto.

1 (g)

" Trust Fund" shall mean any one of the separate- trust ~

funds established hereunder, andt " Trust Funds"'shall mean all of the trust funds established hereunder, collectively, as listed on the separate schedules attached to this- Agreement, as such

schedules may be supplemented from time to time by the Power Agency by written notice to the Trustee.

(h) Future Orders" shall mean any orders of the NRC or any federal or state agency having. jurisdiction over the Power Agency's ,

ownership-interests in'the Plants, or anyEfederal or state laws adopted inL connection- with the retention, invostment and utilization of funds for the. costs of decommissioning any of the Plants herein-described, which are applicable to the. Power Agency.

(1) " Investment. Manager" shall mean any fiduciary -or i

fiduciaries designated as an Investment Manager hereunder by the-Power Agency.

(j) "NRC" shall mean the . United States Nuclear Regulatory '

Commission, an agency _ of; the - United untes Government, . and its successors and assigns.

(k) " Plant" shall mean the Power Agency's undivided ownership interests in and to each, and " Plants" shall mean the Power i Agency's undivided ownership interests in and to all, of the nuclear power plant.s and ' facilities- now. owned or hereafter -

acquired, as listed and described-herein-and.as' supplemented from time to time by the Power Agency by written-notice to the Trustee, ,

and shall mean and. include'all common-facilities associated with each such Plant and facility. .Each unit of a multi-unit. nuclear power plant site-shall be considered as.a separate Plant for the purposes of this-Agreement. -

(1) " Qualified Costs" shall mean the' Power Agency's costs incurred or to be incurred, directly or, indirectly, from time to

time to remove safely the Plant from service and reduce residual

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radioactivity thereof to a-level'that permits release of the Plant for unrestricted use-and termination of the Plant license.

(m)- " Resolution R-2-82" sh'all mean the resolution adopted by the Board of Commissioners on April'l~, 1982, as from time-.to time amended or supplemented by supplemental resolutions.

(n) " Trust" shall maan the Trust established- under this  !

Agreement, and all of. the separate Trust. Funds established 4 hereunder.

(o) " Trustee" shall mean Wachovia Bank & Trust Company, N. A. ,  !

the original Trustee named herein, and.its successors and assigns, which shall be deemed to include any bank or trust company into- I which.it may hereafter be merged or consolidated. Trustee shall also mean any successor Trustee subsequently appof.nted<under the provisions of this Agreement.

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" Trust Estate" or " Trust Property" shall.mean all of' the -

property held from time to time .by the, Trustee 'under this Agreement, including cash, dividends, income, interest, proceeds and other receipts of or from the Trust Estate or Trust Property.

(q) " Withdrawal Certificate" shall:mean a documenti properly completed and executed by an Authorized Representative of the Power Agency and delivered to the - Trustee, in the form of Exhibit'B hereto, certifying that tho' amounts shown therein have been paid by the Power Agency as Decommissioning Costs hereunder.

2.2 Meanina of other Teram.. Except when the context i otherwise requires, words importing the singular number. s nall i

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include the plural number - and vice versa, and words importing 1 l

persons shall include firms, associations, partnerships,-

corporations, and other entities. All? references herein to Articles, Sections and other subdivisions refer to the corresponding Articles, Sections and other subdivisions of this 1

l Agreement; and the words "herein", " hereof", "hereby", " hereunder" 1

' i and words of similar import refer to this Agreement as a whole and  !

not to any particular Article, Section or subdivision hereof.

. ARTICLE III PURPOSE OF TRUST AGREEMENT; ESTABLISHMENT OF SEPARATE TRUSTS 3.1 Intent and Purnosa of Trust Aaremment.- The Power Agency's intent in establishing this Trust and the-separate Trust Funds hereunder is, among other . purposes, to comply with the- 'u applicable NRC regulations 'regarding- decommissioning costs, and with any future regulations or orders by or- from any ' federal or l state agency or any court of competent jurisdiction to which the Power Agency's interest in the Plants is subject with respect to such decommissioning. The Trust Property shall be held: and distributed in accordance with this Agreement solely for the purpose of providing funds to pay Decommissioning Costs and for'no other uses or purposes and it is intended that no third party-have access to any Trust Property except as provided herein.

3.2 Irrevocability and Termination. . Subject to the right of  ;

the parties to amend or modify this Agreement as provided in Section 5.1 hereof, this Trust shall be irrevocable and shall

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. i contin 9e until such time- as- all Decommissioning costs are )

l satisfied,~or until such time as the NRC or other then appropriate

. entity having jurisdiction over the Power Agency's ownership 1

interests in the Plants determines that-such Decommissioning Costs l l

have been satisfied. andi that this Trust is no longer required.

Upon termination of the Trust, all remaining Trust Property, less final trust administration expenses, shall be returned to the Power Agency or its successor.

3.3 Senarate Trust Funds.. 'The Trustee shall initially establish three (3) Trust Funds hereunder,'o!e for each Plant-as -

hereinafter described, each such separate Trust Fund to be known as follows:

(a) Brunswick Unit No. 1 Decommissionina Trust Fund. The Power Agency is'the owner of an 18.33% undivided ownership-interest in the Plant and associated facilities known .as; Brunswick Unit-l No. 1,'which consists of the. nuclear power facilities 'idend.ified L

and= described in License Number' DPR-71 -. issued by the NRC, which license currently expires February 6,-2010.

(b) Brunswick Unit No. 2 Decomminaioniner Trust ~ Fund. The Power Agency is the owner of an 18.33% undivided. ownership interest in the Plant and associated facilities known as Brunswick Unit No. 2, which consists of the nuclear power facilities' identified l_ )

and described in . License . Number DPR-62 issued =by the NRC, which l

_ license currently expires February 6, 2010.

(c) Harris Unit No.~1 Deca ==Immionino Trust-Fund. The Power Agency is the owner of a 16.17% undivided ownership interest in the I

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1 Plant and associated facilities known as Harris Unit No. 1, which consist of the nuclear power facilit'ies ' identified and described in License Number NPF-63 issued by the NRC, which license currently expires October 24,- 2026.

3.4 Seoarate Records, Comminaline of Investments. The initial contribution by the Power Agency to each of the three (3). '

separate Trust Funds is described on Schedules "A",."B" and "C" hereof. The Trustee shall maintain separate records - for . each separate Trust Fund and shall credit thereto the prorata share'of.

all income of the Trust and charge thereto the prorata share of all expenses (other than expenses solely attributable to a particular i

Plant which shall be expenses charged solely to the separate Trust Fund named for such Plant) and any losses. _ Unless otherwise instructed in writing by the Power Agency, however, nothing contained in this Section 3.4 or.elsewhere:herein shall.be deemed to require the Trustee to regregate or separately invest the assets of the separate Trust Funds, it being intended that the assets of '

the separate Trust Funds may be held, managed, . . invested and reinvested'in undivided interests in the same property, but shall not be required to be so maintained or invested.

ARTICLE IV' DISPOSITIVE PROVISIONS 4.1 Pavnent of Nuclear Deca ==issionincr Costs. The Trustee shall make disbursements from the Trust Fund or Trust Funds in accordance with the following procedures:

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(a). Disbdrsements to Third Parties. The Trustee shall make .;

payments _. of Decommissioning costs to any . person (other than the  ;

Power Agency) for goods provided or Llabor or. other services l rendered to the Power Agency, or in the Power Agency's behalf, on:

the date specified in a Disbursement Certificate delivered to the l Trustee by the Power Agency. i

.(b) Raimbursement to the Power Aaencv. The Trustee-'shall make payments to the Power Agency to reimburse the-Power Agency- for - h its payment of Decommissioning costs, on the date specified in a Withdrawal certificate delivered to - the Trustee by the: Power Agency.

j The Trustee .shall be under no duty to inquire into the -

correctness or accuracy of matters contained in any properly executed Disbursement Certificate or Withdrawal Certificate.

4.2 Power Aaencv's Default or Inability to Direct.

In the event of the Power Agency's default in the payment of or inability to direct the disbursement of payments for Decommissioning cons, the Trustee shall make payments from the separate Trust Funds as the NRC or other then appropriate entity having jurisdiction shall direct in writing, whether to third parties or to the Power Agency.

ARTICLE V GENERAL PROVISIONS RELATING TO THE TRUST 5.1 Alterations and Amandaants. The Power Agency and the Tretae understand and agree that modifications or amendments may be required,to this Agreement from time to time to effectuate the

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purposes of this Agreement and to comply with amendments to or [

changes in NRC rules and regulations, any Tuture Orders, and any other changes in the laws applicable to 6he Power Agency, the  :

Plants or this trust. One of the purposes of this Trust is to  !

comply with app *icable NRC regu.?ations concerning nuclear  !

decommissioning costs, and the Power Agency expressly reserves the  :

right to amend or modh'y the Trust Agreement from time to time to conform as necessary or appropriate to any rulings or requests cf the NRC appliciable thereto. The Power Agency and the Trustee may ,

amend this Agrec=nt iT the extent necessary or desirable to effectuate such purpose or to comply with such Future Orde;s or changes. This Agreement also may be modified or amended to effectuate the handling of investments and administrative reports and details. Any modification or amendment to this Agreement shall be by an instrument in writing signed by the Power Agency, the Trustee and filed with the NRC or other then appropriate entity having jurisdiction, or, if the Power Agency cecses to exist', by '

the Truster and the NRC or such - then other appropriate entity. \

Notwithstanding the foregoing, the Trustee may 'locline to adopt ,.3y such amendment if such amendment materially increases the expenses or responsibility of the Trustee and no adequate provision is made l

to compensate the Trustee for such increase, or if the Trustee would be unable, with reasonable offort, to comply with its duties as amended.

! 5.2 Additions to Trust. From time to time prior to the ,

termination of any ssparate Trust Fund hereunder, the Power Agency

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may make, and the Trustee shall accept, additional contributions to l

any onc or more of the separate Trust Funds, provided that any such ,

contribution is acceptable to the Trustee, to be held and administered pursuant to the provisions' of this Agreement. The making of a contribution by the Power Agency shall constitute _the  ;

certification of the Power Agency that all required consents sad approvals to such contribution, if any, have been obtained.

5.3 Return c.? Excess Funds. From time to time prior to the ,

termination of any separate Trust Fund established hereunder, the Power Agency may determine that the assets in any one or more of '

r.he separate Trust Funds exceed the amount required for the >

Decommissioning Costs of the related Plant. Upon delivery to tP,e Trustee of a written certification of the Power Agency, which is joined in by the NRC or other then appropriate entity having jurisdiction, stating that there is an excess amount, specifying the amount of the excess and the Trust rund or Trust Funds involved, and requesting payment of such excess amount, the Trusrae l

shall distribute such excess amount to the Power Agency. The delivery of such a certificate by the Power Agency shall constitute the certification of the Power Agency that all required consents and approvalc to such distribution, if any, have been obtained.

5.4 IIe Tranafarability of Internet in Anv Trust. Except'as provided in Sections 6.1 and 6.2, the interest of the Power Agency in any Trust hereunder is not transferable, whether voluntarily or '

involuntarily, by the Power Agency, nor subject to the claims of general or secured creditors of the Power Agency, provided,

O however, that any creditor of the Power Agency as to which a Disbursement certificate for a separate Trust Fund has been properly completed and submitted to the Trustee may assert a claim directly against such separate Trust Fund in an amount not t exceed the amount sptOifled in such Disbursement Certificate. ^n the event of an attempted transfer by the Power Agency of ith interest herein, or by any third party of its interest herein, whether voluntarily or involuntarily by the Power Agency, a third party or otherwise, the Power Agency's ability to direct payment of any portion of the Trust Estate shall cease and thereafter payments from the Trust or any separate Trust Fund shall be made solely in accordance with the written direction of the NRC or other appropriate entity having jurisdiction.

5.5 89 Authority to conduct Businama. The purpose of this Trust Agroenent is limited to the metters set forth herein and this Agreement shall not be construed to confer upon the Trustee any authority to conduct business.

ARTICLE VI TERMINATION 6.1 Tima of Termination. Each separate Trust Fund estab-lished hereunder shall continue until terminated upon the first to occur of the following events:

(a) Upon the substantial completion of the nuclear decommissioning of the Plant for which a separate Trust Fund is created and named hereunder, as evidenced by a written certifi-

. . . - _ - - . - - - - . _ - - . - . ~ . _ . - - - . - - - - - . - . - - . - . - . _ .

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cation of such substantial cospletion executed by the Power Agency ,

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and delivered to the Tru. teet

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(b) Upon the sale or other disposition by the Power Agency of [

its interest in the Plant for which a separata Trust Fund is l

created and named hereunder, as evidenced !, a written certifi-  !

I cation of such sale or other disposition executed by the Power p

Agency and delivered to the Trustee, provided, however, that any .

1 such certification delivered pursuant to this 6.1(b) or 6.1(a) above, shall be accompanied by an appropriate rule or order from i the NRC or other then appropriate entity having jurisdiction )

i stating that such separate Trust Fund is no longer required and  ;

direction as to distribution of the separate Trust Fund, whether to f the Power Agency or to or for the benefit of the entity succeeding to the Power Agency's ownership interest in the Plant; i f (c) Upon an applicable rule or order of the NRC or other then appropriate entity having jurisdiction, or a final decision of any court of competent jurisdiction, that a Trust Fund for a Plant for i which a separate Trust Fund is created and named. hereunder is no )

i, longer required, but in such event only upon written notificatien i by the Power Agency to the Trustee within thirty (30) days of such i rule, order or final decision that the Power Agency desires to l terminate such separate Trust Fund;  :

(d) Upon the distribution for the purposes of such separate Trust Fund as provided herein of all the assets and property then '

held by the Trustee in a separate Trust Fund created and named ,

hereunder. i i

i

The termination of any separate Trust rund hereunder shall not affect or Mase the tera!. nation of this Trust Agreement or any other separate Trust rund hereunder, and this Trust Agreement shall terminate only when all of the separate Trust runds hereunder have terminated and all assets held by the Trustee hereunder have been distributed.

6.2 Distribution of Trust Ammata Unan Termination. Upon termination of each separate Trust rund hereunder, the Trustee shall distrib.te the entire remaining amount of assets then held by it in such Trust rund, if any, including all accrued, accumulated and undistributed not income, to the Power Agency, or otherwise as the Power Agencv may direct in writing within thirty (30) days of termination.

6.3 cartification by Power Aaanev. Notwithstanding anything herein to the contrary,-in connection with any termination under the preceding sections of this Article VI, the Trustee shall act only upon receipt (a) of an order of the NRC, or the appropriate entity having jurisdiction, or of any court of 3,ompetent juris- ,

diction having jurisdiction over the Power Agency's interest in the l Plants, specifically authorising such distribution, as evidenced to I the Trustee by the written certification of.the Power Agency, or (b) of an opinion of legal counsel to Power Agency to the effect that no such orders are necessary to authorise such distribution.

In addition, any certification by the Power Agency to the Trustee under this Article VI shall infora the Trustee of which of the q subparagraphs of section 6.2 a termination has or is about to take l

I i

) place, (ii) request the Trustee to make a termination distribution l hereunder, and (iii) direct the Trustee as to.the delivery of any i

property to be distributed; it being understood and agreed by the  ;

Power Agency that the Trustee shall be under no duty or obligation  !

to inquire into or determine when and if a termination has occurred i hereunder and that the Trustee shall make any- terminating .,

distribution only in reliance upon the Power Agency's certifica- I tion. i j 6.4 continuation of Trust For Windina Un. After the  !

i termination of any separate. Trust Fund or of all of the separate Trust Funds, and for the purpose of liquidating and winding up its af f airs, the Trustee shall continue to act as such until its duties

, have been fully performed. Upon the distribution of all of the Trust Estate for the purposes of this Trust, or to the Power Agency or as the Power Agency directs, upon termination, and the payment and discharge of all debts, liabilities and obligations of the Trust, the Trustee shall have no further duties or obligations hereunder.

ARTICLE VII GENERAL PROVISIONS RELATED TO THE TRUSTEE 7.1 Manaammant of Trust prc=artv. The Trustee shall hold, manage, invest and reinvest the Trust Property and shall accumulate in the Trust and allocate prorata to each separate Trust Fund (based on the principal balances of each Trust Fund) all not income, af ter payment of expenses and other disbursements as herein provided, from the Trust Property and add the same to the principal 1

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of each separate Trust rund annually. The Trustee accepts and undertakes to discharge the Trust and the separate Trust Funds cretted by this Agreement, upon the terms, provisions and conditions hereof.

1 7.2 pomeannation of Trustaa. The Trustee shall receive as compensation for its servicas hereunder those amounts as set out and agreed to in a letter of even date herewith from the Trustee to the Power Agency signed by the parties hereto. Such compensation may be adjusted from time to time in such amounts as may be agreed upon-in writing by the Trustee and the Power Agency.

7.3 Pavmant of Ernanzas of Administration. Subject to the written approval of the Power Agency, which shall not be unreasonably withheld or delayed, the Trustee shall be authorized

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to make payments from the Trust Estate of all administrative costs reasonably incurred by it in the performance of its duties under this Agreement, including, but not limited to, the Trustee's fees, l

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1egal, accounting and actuarial expenses, reasonable out-of-pocket expenses and other incidental expenses incurred by the Trustee in connection with the administration of this Trust and each separate Trust Fund. The Trustee is also authorized to make payments from i

the Trust Estate of all administrative costs incurred by or on behalf of the Power Agency, including, but not limited ~ to, the fees and expenses of accountants, actuaries, attorneys, consulting i

engineers, Investment Managers, and other consultants, advisors and agents, general administrative fees and costs, and any other fees and expenses determined by the PWer Agency to be reasonably

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connected with the purpose for which this Trust was established and appropriate for payment from the Trust, upon written request from the Power Agency, or to reimburse the Power Agency therefor upon i

i I

its written request. All such administrative expenses of k general  !

nature shall be allocated among the separate Trust Funds estab-lished hereunder prorata (based on the principal balances of each Trust Fund), and the Trustee shall maintain such records as are t

necessary. to reflect the allocation of costs and expenses in accordance with this Section.

7.4 Financial Records and Accounts. The Trustee shall keep ,

accurate and detailed records 'and accounts of all investments, ,

receipts and disbursements and other transactions hereunder and all

, accounts, books and records relating thereto shall be open to inspection and audit at all reasonable time by any person  !

designated by the Power Agency.

7.5 Financial Statements. The Trustee shall furnish monthly financial statements for each separate Trust Fund to the Power Agency not later than the seventh (7th) business day of the

• following month, or at such other . less frequent interval as the .

Power Agency may require. The financial statements shall show the r financial condition of the separate Trust Fund, including without limitation, the market value of the assets, and the receipts, $

income, expenses, disbursements and other transactions of each separate Trust Fund for the period since the preceding statement.

Financial statements may be approved by the Power Agency by written notice thereof to the Trustee and the Power Agency's failure to v - - -- ,e.,.ym. ,,- .,., .y

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object to any such financial statement within six (6) months of its I receipt of the annual audited statements of the separate Trust  :

Funds shall constitute the Power Agency's approval thereof. The approval of any such financial statement shall constitute a full and complete discharge of the Trustee as to all matters set forth i l

l in such financial statement; provided, however, that the foregoing '

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shall not relieve or absolve the Trustee from any liability l

associated with a failure to perform its fiduciary  ;

responsibilities. The financial statements of each separate Trust Fund shall be audited annually by the firm of independent certified 5 i

public accountants then employed by tho' Power Agency or by any '

other firm of independent certified public accountants selected by the Power Agency for such purposes, and the Trustee agrees to make available and furnish such information as may be required for such audit and to cooperate fully in connection therewith.

7.6 Tax Information Returns and other Renorts. The Power Agency represents to the Trustee that it believes- the income of the Trust and the separate Trust Funds will be exempt from federal and state income taxes under current law and regulations. However, the Trustee agrees to prepara or cause to be prepared such income or other tax information returns and reports as may be required from time to time, and shall provide copies thereof to the Power Agency for its review in advance of their filing. The Trustee shall provide to the Power Agency all statements, documents, lists, or other information reasonably requested by the Power Agency. The Trustee shall also sign all such information returns or reports ,

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which may be required and file them or cause them to be filed on a timely basis with the appropriate federal and/or state governmental agencies. The Trustee shall cooperate with all requests made by federal and/or state governmental agencies and shall provide copies to the Power Agency in advance of submitting any information in connection therewith. At the Power Agency's request, the Trustee shall testify with respect to the Trust and the separate Trust -

Funds in any proceedings before federal and/or state governmental agencies or judicial or administrative bodies.

7.7 Transactions with Third Parties. No person or organi- .;

zation dealing with the Trustee hereunder shall be required to inquire into or to investigate its authority for entering into any transaction or to see to the application of the proceeds of'any such transaction. Any person dealing with the Trustee shall be fully protected in relying upon the Trustee's certificate that it has authority to take any action under this Trust Agreement. No person dealing with the Trustee shall be required to following the application by the Trustee of any money or property which may be paid or transferred to the Trustee.

7.8 Eronaration from Bond and Court Returns. The Trustee '

shall not be required to give bond or surety and shall not be I required to file any inventory or appraisal or any annual or other 1 returns or reports with any court whatsoever; provided, however, i

that the Trustee shall furnish the financial statements and reports

to the Power Agency as provided.in Sections 7.5 and 7.6, hereof.

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7.9 Removal of Trustaa. The Power Agency may at any time

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remove the Trustee then serving and appoint a qualified successor  ;

Trustee by instrument in writing signed by the Power Agency and {

delivered to the then serving Trustee, which instrument shall designate and appoint the successor Trustee and which shall be c

effective no later than sixty (60) days from the date thereof or upon such shorter notice as may be acceptable to the then serving '

Trustne, provided that the successor Trustee has signified its acceptance of such appointment by instrument in writing delivered to the Power Agency and the then serving Trustee. Any Trustee so removed shall promptly deliver all property then held by it hereunder to the successor Trustee so appointed and shall thereafter be relieved of any further duties and obligations hereunder.

7.10 Ranianation of Trustaa. Any Trustee then serving hereunder may at any time resign upon sixty (60) days' notice, or upon such shorter notice as may be acceptable to the Power Agency, by an instrument in writing, signed by it and delivered to the Power Agency, and such resignation shall become effective upon the appointment of the qualified successor Trustee by the Power Agency as provided herein.

7.11 Anneine= ant of suceammer Trustaa. In the event of the resignation of the Trustee hereunder, the Power Agency shall

's appoint a qualified successor Trustee by written instrument, signed by the Power Agency, and delivered to such successor and to the

)

Trustee. Should the Power Agency fail or refuse within ninety (90) i A

e, days of receipt of notice of resignation to appoint such successor, then such successor may be appointed by order of the Superior court  ;

of Wake county, North Carolina, upon application of the Power l

Agency, or the then serving Trustee or of any person interested in the Trust or any separate Trust Fund. {

7.12 Accentance of Annointment by Successor Trustaa. Any i successor Trustee appointed hereunder shall execute an instrument i accepting such appointment hereunder and she.ll deliver- a counterpart thereof to the Power Agency and, in case of a resignation or removal, to the-retiring Trustee. Thereupon such successor Trustee shall, without any further act, become vested with all the estates, ' properties, rights, powers, trusts, and duties of its predecessor in the Trusts hereunder with like effect ,

as if originally named Trustee herein; but the retiring Trustee shall nevertheless, when requested in writing by the successor Trustee or the Power Agency, and upon payment of lawful fees, charges and disbursements then unpaid, if any, execute and deliver an appropriate instrument or instruments conytying and transferring to such successor Trustee, upon the trusts herein expressed,-all the estates, properties, rights, powers, and trusts of such retiring Trustee, and shall duly assign, transfer, and deliver to such successor Trustee all property and money held by it hereunder.

7.13 successor Trustee. No successor Trustee shall be required to inquire into or audit, and shall have no liability for, the acts or doings of any predecessor Trustee or be required to make any claims against any predecessor Trustee, and any successor

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Trustee shall have and may exercise any and all of the powers, privileges, immunities, and exemptions herein conferred upon the original Trustee as fully and to the same extent as if such successor originally had been named as a Trustee hereunder.

7.14 Future orders _. The Power Agency shall promptly advise the Trustee in writina of the existence of any Future Orders of which Power Agency is aware having the effect of imposing new or different responsibilities on the Trustee under this Agreement.

7.15 cartain Dutiam and Raanonsibiltima of the Trustaa.

(a) In the absence of bad faith on its part, the Trustee may rely conclusively upon certificates or opinions furnished to the i

Trustee and conforming to the requirements of this Agreement; but l in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall have no duty to examine the saae' to {

determine whether they conform to the requirements of this Agreement unless the representative of the Trustee involved with the certificate in question has actual knowledge that any statement made therein is not true.

(b) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent acts, its own negligent failure to act, its own willful misconduct or any  !

breach of its fiduciary duties, except that (i) this-Subsection shall not be construed to limit the effect of subsection (a) of '

this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of Trustee, I

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unless it shall be proved that the Trustee was negligent in i ascertaining the pertinent facts or was otherwise negligent in making the judgment; and (iii) no provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise ,

incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for. believing that repayment of such funds or adequate indemnity against such risk or j liability is not reasonably assured to it. '

i 7.16 Cartain Richts of Trustaa. Except as otherwise provided ,

in Section 7.15 hereoft '

(a) Any request or direction-of the Power Agency mentioned herein shall be sufficiently evidenced by a written request or direction signed, prepared or furnished by an authorized repre- 1 sentative of the Power Agency, or by a verbal, telephonic or

{ electronic facsimile request or order confirmed within such reasonable time as may be required by the Trustee by such a written request or direction, and any action of the Board of Commissioners of the Power Agency shall be sufficiently' evidenced by a certificate attesting to such action signed by the Power Agency's secretary.or assistant secretary; (b) Whenever in the administration of the Trust or any separate Trust rund created under this Agreement the Trustee shall deem it desirable that a' matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed).may, in l

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i the absence of bad faith or willful negle". on its part, rely upon l the certificate of an Authorized Representative of the Power Agency; (c) The Trustee may consult with legal counsel and any written advice or opinion of such counsel shall be full and

. complete authorization for the Trustee to act in accordance therewith.

The Trustee shall not be liable for and shall be f

protected against any action taken or omitted by it hereunder in  !

good f aith and in reliance thereon, except to the extent the  !

Trustee is negligent in selecting counsei. ,

(d) The Trustee shall be under no obligation to exarcise any i of the rights or powers vested in it by this Agreement at the request or direction of the Power Agency pursuant to this Agreement, unless the Power Agency shall have offered to the I Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in i compliance with such request or direction.

ARTICLE VIII LIMITATIONS ON AND DIRECTIOF,5 TO TRUSTEE AS TO INVESTMEN'tS 8.1 Investment. The Trustee shr.ll invest and reinvest all of the Trust Property without distinction between principal and income, initially as set forth in Section s.2 or in accordance with the general investment policies and guidelines which may, from time to time, be communicated in writing to the Trustee by the Authorized Representatives. The Power Agency shall provide the i

1 i

. j Trustee with a written certification setting forth the names and

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specimen signatures of the Authorized Representatives. The i Authorized Representatives shall have authority to communicate the  !

Power Agency's general investment policies or direct the I acquisition, retention and disposition of any investments f hereunder. Unless otherwise notified in writing by the Power i i

i Agency, the Trustee shall be protected in relying on all certi- -

fications, directions and instructions received from any Authorized Representative and reasonably believed to be genuine and to be  !

i signed by any Authorized Representative that direct the  :

acquisition, retention and disposition of any specific investments l of Trust Property. The Trustee shall be under no duty to make any investigation or inguiry as to the truth or accuracy of any statement contained in any such certification, direction or instructions. To the extent the assets of the Trust _ Funds have not been invested at the direction of the Power Agency on any given day, the Trustee shall invest such uninvested assets including any uninvested cash, in permitted investments described in section 8.2, from which such investments or cash (including any earnings l thereon) may be withdrawn on a daily basis. The Power Agency and the Trustee shall establish appropriate systems, guidelines and procedures in order to etfactuate such handling of investments by .

the Trustee hereunder. '

8.2 Limitations en Invent =anta. Initially the Power Agency l

intends that investments under this Trust be limited to those l permitted from time to time by Resolution R-2-82 and, to the extent 1

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' . j not inconsistent therewith, by the State of North Carolina and its i

( political subdivisions for public funds, and intends to establish '

policies, procedures, guidelines and restrictions for handling investments under this Trust, which it may from time to time l modify, change or supplement by written direction to the Trustee '

(the " Investment Policy"). To the extent permitted by applicable l law, the Power Agency may, by notice to the Trustee, expand, contract or otherwise change the Investment Policy. The Power l~ Agency has determined that investments under this Trust may .

~

include, but shall not necessarily be limited to, the following described assets and securities (" Permitted Investments"):

(a) Direct obligations of, or obligations the principal of j and interest on which are unconditionally guaranteed by, the United States of America; (b) Bonds, debentures, notes, participation certificates or  !

other evidences of indebtedness issued, or the principal of and ~

interest on which are unconditionally guaranteed, by the Bank for Cooperatives, the Federal Intermediate Credit Bank, the Federal l

Home Loan Banks, the Export-Import Bank of ths United States, the -

Federal Financing Bank, the Federal Land Banks, the. Federal National Mortgage Association, the United States Postal Service, the Gcvernment National Mortgage Association, the . Farmers Home Administration, the Federal Home Loan Mortgage Association, or any other agency or instrumentality of or corporation wholly owned by

! the United States of America;

l (c) New Housing Authority Bonds or Project Notes issued by public agencies or municipalities and fully secured as to the [

payment of both principal and interest by a pledge of annual 1

contributions to be paid by the United States of America or any i agency thereof; (d) Direct and general obligations, to the payment of which i the full faith and credit of the issuer is pledged, of.the State of North Carolina or any political subdivision thereof which.at'the time of investment is rated by any nationally recognized bond rating agency and assigned by such agency a rating which denotes a security with investment characteristics at least equal to the insestment characteristics of a security presently rated by Moody's Investors service, Inc., as "A" at such time; (e) Repurchase agreements with a bank trust company or national banking association which is a member of the Federal Reserve System or any government bond dealer reporting to the Federal Reserve Bank of New York, which agreements are fully secured on a market value basis (based upon a valuation made but not less than monthly) by obligations described in subparagraphs a, b, c, or d of this paragraph, the collateral for such repurchase agreements to be segregated and held by the Trust 9e for the fund in which such collateral is on deposit, unless tt< collateral.is on deposit in the Construction Fund and there is no Construction' Fund Trustee, in which case the collateral is to be segregated and held as Power Agency may direct; '

(f) Bank time deposits evidenced by certificates of deposit, i j

and bankers' acceptances, issued by any bank, trust company or l national banking association whose principal place of business is j i

in the State of North Carolina, provided that the aggregate of such bank time deposits and bankers' acceptances issued by any bank, j trust company or banking association do not exceed at any one time i fif ty per centum (504) of the aggregate of . the capital stock, j

surplus and undivided profits of such bank, trust company or j t

) banking association and provided further that such capital stock, ,

t

, surplus and undivided profits shall not be less than Twenty Million l Dollars ($20,000,000); and '

) (g) Bank time deposits evidenced by certificates of deposit, and bankers' acceptances, issued by any bank, trust company or ,

i national banking association which is a member of the Federal Reserve system and authorized to do business in any state of.the United States of America other than the State of North Carolina, provided that the aggregate of such bank time deposits and bankers' acceptance issued by any bank, trust company or banking association do not exceed at any one time twenty-five percentum (25%) of the aggregate of the capital stock, surplus and undivided profits of such bank, trust company or banking association and .provided further that such capital stock, surplus and undivided profits ,

shall not be less than Fifty Million Dollars ($50,000,000)..

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i 8.3 Certain Duties of Trustaa as'to Power Aaenev-Directed '

Investments. The Trustee shall have no duty or obligation to make i

l any recommendations with respect to the acquisition, retention and disposition of any investment acquired at the direction of the i

i Power Agency, and shall have no liability or responsibility to the 1

l Power Agency or the Trust Funds for acting on the directic ,of, or J for failure to act in the absence of direction from the Power Agency. However, the Trustee shall review the transactions of the i Power Agency and the Trust Funds on a daily basis for the purposes of (1) investing uninvested assets in accordance with the i

provisions of Section 8.1 and (ii) determining whether any assets  !

i acquired or to be acquired are permissible investments under the guidelines established by the Power Agency for the Trust Funds or the provisions of Section 8.2 hereof, as from -time to time l

modified, and shall notify the Power Agency within one (1) business day by telephone, confirmed in - writing, if it . determines as a ,

result of any such daily review that an investment is not .

permissible under either the guidelines established for the Trust .

Funds or the provisions of Section 4.2 hereof.

8.4 Annointmant of Invan&= ant Mananar. The Power Agency shall have the right from time to time to appoint and remove one or ,

more Investment Managers for any separate Trust Fund held hereunder and to direct the segregation of any part or all of any such separate Trust Fund into one or more accounts to be known as  !

" investment manager accounts" and, if it does so, it shall appoint  !

an individual, partnership, association or corporation- as

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Investment Manager to manage that portion of any separate Trust Fund so segregated. Written notice of any such appointment and/or  !

i removal shall be given to the Trustee and thw Invisstment Manager so appointed. The appointment shall be accomplished using an f investment manager agreement signed by the Power Agency and the  !

Investment Manager and acknowledged by the Trustee. As long as the f l

Investment Manager is acting as such, the Investment Manager shall '

i have full authority to , direct the acquisition, retention and disposition of the assets which from time to time constitute the investment manager account being managed by the Investment Manager  !

and except as otherwise set forth in this section s.4, the Trustee shall have no duty or obligation to review the assets which from '

time to time constitute such investment manager account.  :

The Trustee may assume that any investment manager account previously established and the appointment of any Investment Manager for that account continues in full force until receipt of written notice to the contrary from the Power Agency. Pending i receipt of directions from the Investment Mer.ager , any cash received by the Trustee fros time to the for any investment manager account shall be invested upon receipt in Permitted Investments from which such cash (including any earnings thereon) -

may. be withdrawn on a daily basis. So long as the Investment Manager is directing the investments in an investment manager l

account, the Trustee shall have no duty or obligation to make any recommendations with respect to the acquisition, retention or '

disposition thereof, and shall have or incur no liability or d

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rocponsibility for acting on the direction of, or for failure to act in the absence of direction from, the Investment Manager for 2 any investment manager account. However, the Trustee shall review l

the transactions of the Investment Manager and the separate Trust I

Funds on a daily bs=le for the purpose of datermining whether any 4

assets acquired or to be acquired are permissible investments under i the guidelines established by the Power Agency for the Trust Funds I or the provisions of Section 8.2 hereof, as from time to time modified, and shall notify the Power Agency and the Investment Manager within one (1) business day by telephone, confirmed in writing, if it determines as a result of any such daily review that ,

an investment is not permissible under either the guidelines established for the Trust Funds or the provisions of Section 8.2 I hereof. The Trustee shall advise the Investment Manager of ,

information it receives from an issuer or similar source regarding  ;

calls, redemptions, purchase offera and similar matters relating to <

assets held in any Trust rund hereunder. The Power Agency will r indemnify the Trustee and hold it harmless from any liability or expense it may incur in connection with or arising out of (i) any

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action taken or omitted to be taken in connection with or any investment of, the investment manager account made by the Trustee i at the direction of the Investment Manager, or (ii) any action I taken by the Trustee pursuant to notification of an order issued by )

the Investment Manager to purchase or sell securities directly to I i

a broker or dealer under a power of attorney.

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ARTICLE IX ,

TRUSTEE'S POWERS *

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9.1 Powers of the Trustaa. In the management, care and disposition of this Trust and the separate Trust Funds, ths Trustee f

hereunder, subject to the specific provisions hereof, shall have )

the discretionary power to do all things and to execute such

\

instruments as may be deemed necessary or proper, including, but not limited to, the following powers, all of which may be exercised ..

without order of or report to aay courts (a) subject to the provisions of uticle VIII of this Agreement, to invest and reinvest all Trust Property and other cash making up a part of the Trust Estate as the Trustee shall deem advisable; (b) To sell, exchange or otherwise dispose of any property at any time held or acquired under this Trust or any Separate Trust Fund, at public or private sale, for cash or other terms and conditions, without advertisement, including the right to lease and  !

to grant options to buy for any tara notwithstanding the period of the Trust and to transfer or convey any such property or any interest therein in fee simple absolute or otherwise, free and clear of trust; '

t (c) To retain for investment for such time as the Trustee >

deems advisable any property transferred to this Trust by the Power-Agency, i without regard to - any law new or hereafter in force limiting the investments of fiduciaries, and; except as provided in -

Article VIII of this Agreement, the Trustee shall be under no i

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< l obligation to diversify the investments of the Trust or any i

separate Trust Fund, either as to kind or amount; 1 l

(d) To collect, receive and hold any and all dividends, I interest, income profits, and other property of whatsoever kind or i

. nature due, owing or belonging to the Trust or any separate Trust i Fund; t i

(e) To vote in person or by special, limited or general  !

proxy, with full power of substitution, and to agree to or take any >

other action in regard to any reorganization, merger, l consolidation, liquidation,. bankruptcy or other procedure or proceeding affecting any stocki- bond, note, security or other asset  !

held as part of the Trust Estate; (f) To register any stock, bond or other security in the nominee of any nominee, without the addition of words indicating that such security is held in a fiduciary . capacity; provided, however, that accurate records shall be maintained showing that such security is a trust asset, and the Trustee shall be 1

responsible for the acts of such nominee; (g) To exercise all options, rights and privileges with respect to any Trust Property; (h) Subject to approval of the Power Agency, which shall not be withheld unreasonably, to employ, retain and remove attorneys, accountants, insurance consultants, custodians, engineers and other agents, if such employment is deemed necessary, and to pay reasonable compensation for their services; I

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(i) To compromise, settle, arbitrate, sue or defend, abandon i or adjust any claim or demand by or against the Trust or any separate Trust Fund, and to agree to any rescission or modification of any contract or agreement affecting the Trust or any separate Trust Fund; (j) To perform any act authorized, permitted, or required i under any instruments relating to or forming a part of the Trust 1

Estate whether in the nature of an approval, consent, demand, or l notice thereunder or otherwise, unless such act would require the consent of the Power Agency in accordance with the express provisions of this Agreement; '

(k) To make contracts and to execute instruments, under seal or otherwise, as may be necessary in the exercise of the powers herein granted; (1) To pay taxes, assessments, compensation of the Trustee and other expenses incurred in the collection, care, administration and protection of the Trust Estate; (m) To determine, irrespective of statute or rule of law, what items shall be fairly and equitably charged or credited to income and what items to principal, and to so allocate or apportion receipts and expenditures, regardless of whether such items are charged me credited to income and principal as provided in chapter 37 of the General Statutes of North Carolina; (n) To do and perform any acts or things and only those acts or things necessary or appropriate for the conservation and protection of the Trust Estate.

• . i ARTICLE X MISCELIs\NEOUS PROVISIONS 10.1 Headings. All Article and Section headings set forth in  :

this Agreement are for convenience only and shall not be deemed to ,

be a part of this Agreement for any other purpose and shall not be '

taken as in any way limiting or interpreting any Section or Subsection of this Agreement. I 10.2 savarab111tv. In the event any provision of this Agreement or its application to any person or in any circumstance ,

shall be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of ,

l this Agreement shall be valid and enforced to the fullest extent  !

permitted by law.

10.3 Governina Law. This Agreement is enter'ed into and executed in the State of North Carolina, ar.J 'all questions .

pertaining to its validity, construction and administration shall be governed by and determined in accordance with the laws of the State of North Carolina.

10.4 Notices. All notices required to be given by this Agreement shall be in writing and be deemed to have been properly given if delivered by hand or when mailed by registered or certified mail, return receipt requested, postage prepaid, to the parties hereto as follows:

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If to the Power Aaancvr North Carolina Eastern Municipal Power Agency 1427 Meadowwood Boulevard Post office Box 29513 Raleigh, North Carolina 27626-0513 Attention: General Manager If to the Trustaat Wachovia Bank & Trust Company '

First Wachovia Employee Benefit Servi;es 301 North Main Street Winston-Sales, North Carolina 27510 or at such other address or addresses, or to the attention of such other person or persons, as the Power Agency or the Trustees may hereafter notify the other party in accordance herewith.

10.5 Fiscal Year. The fiscal year of the Trust shall and on December 31 of each year.

10.6 succammera and Ammiana. This Agreement shall be binding upon and inure to the benefit of the Power Agency, the Trustee, and <

their respective successors and assigns. i 10.7 counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together_ constitute but one and the same instrument.

IN WITNESS WHEREOF, the Power Agency and the Trustee have each -i hereunto caused their respective corporate names and seals to be affixed and this Agreement to be executed and delivered by and i

-37=

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through their duly-authorized officers, all as of tb effective day and year first above written.

i NORTH CAROLIFA EA&rERN MUNICIPAL POW AGENCY I )

By: [ la su v I- ( t t. e 4 '._

jChairman Attest: ]ALDfWbiri.}f1 ~ ,

' Secretary (CORPORATE SEAL)

WACHOV BANK & TRUST COMPANY, N.A. .

By <

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. l Its: senior vice President *

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Attest i '

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Its k~~I . **.IsA L '.<<b.

(CORPORATE SEAL) i L

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SCHEDULE A.

BRUT DICK UNIT No.-1 DECOMNISSIONING TRUST FUND I

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i NORTH CAROLINA EASTERN MUNICIPAL-- i POWER AGENCY By: , ,

Chairman 1

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SCHEDULE'B BRUNSWICK UNIT NO. 2 DECOMMISSIONING TRUST FUND l

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'I NORTH CAROLINA EASTERN MUNICIPAL POWER ~ AGENCY  ;

1 By:

Chairman I l

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Iw SCHEDULE C HARRIS UNIT No. 1 DECOMMISSIONING TRUST FUND  ;;

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NORTH CAROLINA. EASTERN MUNICIPAL POWER AGENCY By:

Chairman-

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,J Herrio Unit 1 Appendix C r

A. copy of Resolution R-9-90 of Power Agency's ,

Board.of Commissioners (adopted June 27, 1990).

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I V ey=. g mn 4

t R-9-90 i

RESOLUTION OF THE BOARD OF COMMISSIONERS OF NORTH CAROLINA EASTERN MUNICIPAL POWER = AGENCY AUTHORIZING THE FILING-OF A FINANCIAL ASSURANCE ,

PLAN FOR THE DECOMMISSIONING OF NUCLEAR POWERED '

ELECTRIC: GENERATING' UNITS, APPROVING A FORM OF 4

DFCOMMISSIONING TRUST AGREEMENT AND  !

APPOINTING A TRUSTEE THEREUNDER '

I North Carolina Eastern Municipal Power Agency-(" Power Agency")

is the owner.of (1) an 18.33% undivided ownership interest in each of the nuclear powered electric generating units and associated '

facilities known as Brunswick Nos. 1 and 2, and (ii) a 16.17%

{

undivided ownership interest in the nuclear , powered. electric generating unit.and associated facilities known as Harris UnitLNo.

1, (collectively, the " Generating Units"); and i WHEREAS, pursuant to the Operating and Fuel Agreement between Power' Agency and Carolina Power - & Light Company . dated June '30, 1981, Power Agency is obligated to pay a portion of-the-costs of decommissioning of the Generating Units in proportion to its rr2pective ownership interests-.therein;-and WHEREAS, the Generating Units' and1the associated facilities are subject to the jurisdiction of' the United- States Nuclear Regulatory Commission (the "NRC"), an agency of the United States Government; and WHERE&B, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy ' Reorganisation Act of .1974, the NRC has-promulgated regulations in Title 10, Chapter 1 of the Code of.

Federal Regulations, Part 50 (the " Regulations") , which require that a holder of, or an applicant for, a license to operate a nuclear power' plant provide certain financial assurance that funds aa... . ....i....i .

n will be available when needed for- required decommissioning costs and activities; and WHEREAS, Power Agency, in order to comply with the Regulations,:among other reasons, desires to provide such financial i assurance and approve a decommissioning trust agreesent.

HOW, THEREFORE, BE- IT RESOLVED BY THE BOARD OF COMMISSIONERS OF NORTH CAROLINA EASTERN MUNICIPAL POWER' AGENCY:

1.- It i~ in the best interests of Power Agency - that it comply with tt Regulations and. provide the ' required fittancial -

L assurance to the NRC and,' to that end, the staff is hereby directed to prepare the necessary and required information and documentation for filing.

2.

The establishment of an external trust ~ fund is determined to be the most advantageous method of providing assurance of funds for nuclear decommissioning, based - on financial, economic and practical considerations; 3.

The Decommissioning Trust Agreement, substantially in the form as that presented at this meeting, is hereby' approved, with such modifications as the-Chairman or Vice chairman of the Board, upon the advice of counsel to Power Agency, approves.

4.

The chairman or Vice chairman and - Secretary or 'any Assistant secretary .of Power _ Agency are hereby authorized and directed to execute .the Decommissioning Trust Agreement and to deliver it to the NRC and the Trustee.

5. i The Chairman or Vice Chairman and Secretary or any Assistant Secretary of Power Agency are hereby authorized and l

4

y directed to execute the financial assurance plan and to file it,.

and any necessary supporting documentation, with the NRC.

6. Wachovia Bank & Trust company, N.A., is hereby appointed l Trustee under and in accordance with the terms of the 1

Decommissioning Trust Agreement.

7. A copy of the financial assurance plan and the l

Decommissioning Trust Agreement shall be filed with the minutes of the meeting.

8. This' Resolution shall become effecti"3 upon.its adoption.

Adopted this 3 day of June , 1990.

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.' ~Narr10 Unit 1 '

1 Appendix D  ;

Opinion.of Poyner & Spruill, counsel to Power {

Agency, concerning the Decommissioning Trust '

Funds.

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POYNER & SPRUILL ,

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. .CRT Caract eCa 353 ROCAVh.CvNT,NC 47002 C353 19 91 646 2348

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June'29, 1990 Board of Commissioners North Carolina Eastern Municipal Power Agency Post Office Box 29513 Raleigh, North Carolina 27626-0513 Re: LNorth Carolina Eastern Municipal Power Agency-Decommissioning Trust Agreement ,

Gentlemen:

We have examined a copy of the Decommissioning Trust Agreement.

(the " Agreement") of the North Carolina Eastern Municipal Power Agency (the " Power Agency") that is to be used to establish an external trust fund as-required by Title 10, Chapter 1.of the Code of Feden1 Regulations, Part 50, to provide'for the payment of a portion of Decommissioning Costs of the Power Agency.as defined in and pursuant to the Agreement. We have also examined such other related matters of North Carolina and federal law as we have deemed necessary-to render our opinion herein. . Capitalized terms used herein have'the same meaning as in the Agreement.

Based upon the provisions of currently existing North Carolina and federal' law, we'are of the opinion that:

1 1. A creditor of the Trustee should not.be able to reach the "

assets comprising the Trust Estate to apply toward.or to' satisfy any independent liability of the Trustee not connected with and'not arising frau the administration of the Trust and'the duties of.the Trustee thereunder; s 1

I e w 4 yrs --e- w- .- * *-- -----.-e _s ---%- -_

4 ."

4 POYNER & SPRUILL Page 2 June 29, 1990 i

2. A creditor of a third party _who is entitled to'be paid .

from the Trust Estate.for services rendered or labor _ performed in '

connection with Decommissioning-Costs should not be able to reach '

the assets comprising tho ' Trust Estate to _ apply toward or. to satisfy any liability of such third party _to such creditor except' i to the same extent, and subject to the same limitations, that such 'l third party would be entitled to payment from the Trust Estate; and l 1

3. A creditor of the Power- Agency should not be able ' to reach l the assets comprising. the Trust Estate to apply toward' or to-  !

satisfy any liability of Power Agency to such creditor except to j the same extent, and subject to the same-limitations, that the  ;

Power Agency is entitled to withdraw assets from the Trust Estate- I for its own benefit or.upon a reversion of the Trust Estate to Power Agency as provided in and - pursuant - to _ the - terms of the "

1 Agreement.

In rendering the opinions expressed above, we'have assumed that the Power Agency will be solvent immediately prior. to the

. making of any transfer or Janucibution to the Trust- and will not be l

' .c rendered insolvent hy- the making of any such. transfer. or contribution. We have also assumed that the making of'any such j

' transfer or contribution to - the Trust will not constitute a fraudulent conveyance under North--Carolina or federal law.

We are admitted to practice 'only in the State of North Carolina. We express no opinion as:to matters under or involving i

the law of any jurisdiction other than the laws of the United States and the State of North Carolina.

' very truly yours,  ;

[r_ s' /

M SLC/jws l

140111\00098\SLCD0101.LET A

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• - H3rrio Unit 1 Appendix E i

Schedule of Deposits to the Deccmmissioning- I Trust Funds. l l

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' File: EXTFD52 NORim CAA0LIIt4 EASTERN MUNICIPAL POE t AGENCY Date: 19-Jim-90 bisk: F2671m Projected operation of Enternal Decautissioning Fed Seck: EF-5170-PG4-AA Time: 09:52 m Norris tmit 1 user: Jan (S000)

--Case: NRC Minieue Financist Assurance Amo et to Enternet femd.

-Ending Armuel Interest Fed A samptlens . Veer Revenues (1) Earnings talance Decommissioning:

i 1990 1,919 [2?

Cost Eatiente (HRC Ninien)[1] S129 843 1991 365 147 2,431 1 Veer of Estteste Operating Licence Empiration

-b 1992 383 184 2,997 '!

10/24/2026 1993 402 224 3,fz3 Projected Cost ' 6782,340 19M 422 268 4,314 .

A0ancy Shere of Cost (16.171) S126,504 1995 443 318 5,075 1996 466 372 5,912 Bates: . 1997 489 431 - 6,832 ,

Decommissioning Cost Escalation 5.00E 1998 513 496: 7,841 Asmunt nevenues Increase 5.00E 1999 539 568 8,968 Interest Earnings 7.001 ~2008 566 646 10,160 2001 594 732 11,486 2002 624 - SM 12,936-

[U E4tlante based on WP9,425 in 2003 455 928 14,519

-1986 detters, escateted to 1990 tsy CPSL.

'2004 m 1,040 M,248

', 2005 722- 1, M3 18,132 .l 2006 758- 1,296 20,187 2007 796- 1,441 ' 22,424 2005 836 .-1,599 24,859 2009 878 1,771 27,507 2010 922 1,958 30,387 2011. 968 2,161 33,516 2012 1,0M 2,382 36,913 -1 2013 1,067 2,621 40,602 -

2014 1,120 2.881 44,603 2015 : 1,176 3,M3 48,943 2016 1,235 3,469 : 53,648

2017 1,297 3,801 58,745 4

2018 1,362 4,160 64,267 2019 1,430 4,549 _ 70,246 :

i 2020 1,501 4,970 . 76,717 1 2021 1,576 5.425- 83.719

2022 1,655 5,918 91,292

.2023 1,738 6,451 99,482 2024 1,825. -7,028 108,334 '?

2025 1,9M 7,650 117,901 2026 126,504 1,6T7 (3) ...'6,926 Totals $34,622' . $89,963 IU Annual revenues collected in equal monthly amounts.

j [2] Transfer from internet fund ef fective 12/31/90.

13) 1en months' deposits.

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