Allegheny Power 2010 Annual Report Download - page 135

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Nuclear Plant Matters
During a planned refueling outage that began on February 28, 2010, FENOC conducted a non destructive examination
and testing of the CRDM nozzles of the Davis-Besse reactor pressure vessel head. FENOC identified flaws in CRDM
nozzles that required modification. The NRC was notified of these findings, along with federal, state and local officials.
On March 17, 2010, the NRC sent a special inspection team to Davis-Besse to assess the adequacy of FENOC’s
identification, analyses and resolution of the CRDM nozzle flaws and to ensure acceptable modifications were made prior
to placing the RPV head back in service. After successfully completing the modifications, FENOC committed to take a
number of corrective actions including strengthening leakage monitoring procedures and shutting Davis-Besse down no
later than October 1, 2011, to replace the reactor pressure vessel head with nozzles made of material less susceptible to
primary water stress corrosion cracking, further enhancing the safe and reliable operations of the plant. On June 29,
2010, FENOC returned Davis-Besse to service. On September 9, 2010, the NRC held a public exit meeting describing
the results of the NRC special inspection team inspection of FENOC’s identification of the CRDM nozzles with flaws and
the modifications to those nozzles. On October 22, 2010, the NRC issued its final report of the special inspection. The
report contained three findings characterized as very low safety significance that were promptly corrected prior to plant
operation.
On April 5, 2010, the Union of Concerned Scientists (UCS) requested that the NRC issue a Show Cause Order, or
otherwise delay the restart of the Davis-Besse Nuclear Power Station until the NRC determines that adequate protection
standards have been met and reasonable assurance exists that these standards will continue to be met after the plant’s
operation is resumed. By a letter dated July 13, 2010, the NRC denied UCS’s request for immediate action because “the
NRC has conducted rigorous and independent assessments of returning the Davis-Besse reactor vessel head to service
and its continued operation, and determined that it was safe for the plant to restart.” The UCS petition was referred to a
petition manager for further review. What additional actions, if any, that the NRC takes in response to the UCS request
have not been determined.
Under NRC regulations, FirstEnergy must ensure that adequate funds will be available to decommission its nuclear
facilities. As of December 31, 2010, FirstEnergy had approximately $2 billion invested in external trusts to be used for the
decommissioning and environmental remediation of Davis-Besse, Beaver Valley, Perry and TMI-2. FirstEnergy provides
an additional $15 million parental guarantee associated with the funding of decommissioning costs for these units. As
required by the NRC, FirstEnergy annually recalculates and adjusts the amount of its parental guarantee, as appropriate.
The values of FirstEnergy’s nuclear decommissioning trusts fluctuate based on market conditions. If the value of the
trusts decline by a material amount, FirstEnergy’s obligation to fund the trusts may increase. Disruptions in the capital
markets and its effects on particular businesses and the economy could also affect the values of the nuclear
decommissioning trusts. The NRC issued guidance anticipating an increase in low-level radioactive waste disposal costs
associated the decommissioning of FirstEnergy’s nuclear facilities. As a result, FirstEnergy’s decommissioning funding
obligations are expected to increase. FirstEnergy continues to evaluate the status of its funding obligations for the
decommissioning of these nuclear facilities.
On August 27, 2010, FENOC submitted an application to the NRC for renewal of the Davis-Besse Nuclear Power Station
operating license for an additional twenty years, until 2037. On December 27 and 28, 2010, a group of petitioners filed a
request for hearing contending that FENOC failed to adequately consider wind or solar generation, or some combination
thereof, as an alternative to license extension at Davis-Besse. They further argued FENOC had failed to adequately
assess the cost of a severe accident at Davis-Besse. FENOC and the NRC staff responded to this pleading on January
21, 2011, demonstrating that none of the petitioners' arguments were admissible contentions under the National
Environmental Policy Act or NRC regulations. An Atomic Safety and Licensing Board panel is expected to determine
whether a hearing is necessary.
Ohio Legal Matters
On February 16, 2010, a class action lawsuit was filed in Geauga County Court of Common Pleas against FirstEnergy,
CEI and OE seeking declaratory judgment and injunctive relief, as well as compensatory, incidental and consequential
damages, on behalf of a class of customers related to the reduction of a discount that had previously been in place for
residential customers with electric heating, electric water heating, or load management systems. The reduction in the
discount was approved by the PUCO. On March 18, 2010, the named-defendant companies filed a motion to dismiss the
case due to the lack of jurisdiction of the court of common pleas. The court granted the motion to dismiss on September
7, 2010. The plaintiffs appealed the decision to the Court of Appeals of Ohio, which has not yet rendered an opinion.
Other Legal Matters
There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to FirstEnergy's
normal business operations pending against FirstEnergy and its subsidiaries. The other potentially material items not
otherwise discussed above are described below.