FirstEnergy Nuclear Operating Company76 South Main StreetAkron, Ohio 44308

June 18, 2013L-13-142

ATTN: Document Control DeskU.S. Nuclear Regulatory CommissionWashington, DC 20555-0001

10 cFR 50.75

SUBJECT:Beaver Valley Power Station, Unit No. 1Docket No. 50-334, License No. DPR-66Perry Nuclear Power PlantDocket No. 50-440, NPF-58Response to Request for Additional Information on Parental Guaranty and Submittal ofAmended and Restated Parental Guaranty (TAC Nos. MF0401 and MF0403)

By letter dated Decemb er 17 , 2012 [Agencywide Documents Access and ManagementSystem (ADAMS) Accession No. ML12363A0371, FirstEnergy Nuclear OperatingCompany (FENOC), on behalf of FirstEnergy Corp. (FE) and FirstEnergy NuclearGeneration Corp. (FENGenCo) (now FirstEnergy Nuclear Generation, LLC), provided acopy of a $9S million parental guaranty dated December 17,2012 to the NuclearRegulatory Commlssion (NRC). This parental guaranty incorporated terms to complywith the new NRC regulations and reflected the new name of the licensee as describedin the NRC's issuance of license amendments on October 2,2012 (ADAMS AccessionNo. M112221A413). By letter dated March 28, 2013 (ADAMS AccessionNo. ML13086A244), NRC staff requested additional information to complete its review.The response to the request for additional information (RAl) is provided in theattachment.

By fetter dated March 25,2013 (ADAMS Accession No. ML13084A374), FENOCsubmitted the decommissioning funding status reports for the Beaver Valley PowerStation, Unit Nos. 1 and 2, the Davis-Besse Nuclear Power Station, and the PerryNuclear Power Plant for the year ending December 31 , 2012. FENOC recognized thata shortfall existed for FENGenCo for Beaver Valley Power Station, Unit No. 1, and PerryNuclear Power Plant. To resolve the shortfall, FENOC obtained a $125 millionamended and restated parental guaranty.

The existing $95 million parental guaranty took effect on April 16,2A13, 120 days afterthe December 17,2012 notice (ADAMS Accession No. ML12363A037) was provided tothe NRC. Underthe terms of Section 14 of the existing parental guaranty, FE herebyprovides the enclosed amended and restated parental guaranty to address both the

Beaver Valley Power Station, Unit No. 1Perry Nuclear Power PlantL-13-142Page 2

shortfall described above and the changes resulting from the RAI response. Theamended and restated $125 million parental guaranty replaces the existing $95 millionparental guaranty. The amended and restated $125 million parental guaranty will comeinto force effective 30 days after this written notice to the NRC.

A certification that FE meets the applicable financial test requirements for issuing aparental guarantywas provided as an enclosure to a letterdated March 29,2013(ADAMS Accession No. ML13091A057). The financial test was conducted based onFE's 2012 audited annual financial results, and these are the most recent auditedannual financial results that are available.

There are no regulatory commitments contained in this letter. lf there are any questionsor if additional information is required, please contact Mr. Thomas A. Lentz, Manager -Fleet Licensing, at 330-315-6810.

Sincerely,

Director, Fleet Regulatory Affairs

Attachment:Response to Request for Additional f nformation

Enclosure:Amended and Restated Parental Guaranty

cc: NRC Region lAdministratorNRC Region lll AdministratorNRC Resident Inspector (BeaverValley Power Station, Unit No. 1)NRC Resident Inspector (Perry Nuclear Power Plant)NRR Project Manager (Beaver Valley Power Station, Unit No. 1)NRR Project Manager (Perry Nuclear Power Plant)Director BRP/DEPSite BRP/DEP Representative

H. Halnon

AttachmentL-13-142

Response to Request for Additional InformationPage 1 of 3

By fetter dated December 17,2012 [Agencywide Documents Access and ManagementSystem (ADAMS) Accession No. ML12363A0371, FirstEnergy Nuclear OperatingCompany (FENOC), on behalf of FirstEnergy Corp. (FE) and FirstEnergy NuclearGeneration Corp. (FENGenCo) (now FirstEnergy Nuclear Generation, LLC), provided acopy of a parental guaranty dated December 17,2012 to the Nuclear RegulatoryCommission (NRC). By letter dated March 28,2013 (ADAMS AccessionNo. ML13086A244), the NRC staff requested additional information to complete itsreview. The response to the request for additional information (RAl) is provided below.The NRC staff question is presented in bold type, followed by the FENOC response.

RAI No. I

Item 10 of the proposed parental guaranty states that "[t]he Guarantor andFENGenCo agree that if the Guarantor fails to meet the financial test criteria atany time after this Guaranty is established, the Guarantor and FENGenCo shallsend, within 90 days of the end of the fiscal year in which the Guarantor fails tomeet the financial test criteria, written notice to the NRC using NRG's electronicinformation exchange. lf FENGenCo fails to provide alternative financialassurance as specified in 10 CFR Part 50, as applicable, and obtain writtenapproval of such assurance from the NRC within 180 days of the end of suchfiscal year, the Guarantor shall provide such alternative financial assurance in thename of FENGenCo or make full payment under the Guaranty to the existingstandby trust established by FENGenCo."

Regulation at Section ll.C.2 of the Appendix A to 10 CFR Part 30 states:

lf the parent company no longer meets the requirements ofparagraph A of this section, the licensee must send notice to theGommission of intent to establish alternate financial assurance asspecified in the Gommission's regulations. The notice must be sentwithin 90 days after the end of the fiscal year for which the year-endfinancial data show that the parent company no longer meets thefinancial test requirements. The licensee must provide alternatefinancial assurance within 120 days after the end of such fiscal year.

In addition, Section ll.B of the Appendix A to 10 CFR Part 30 states:

lTlhe licensee must inform the NRG within 90 days of any matterscoming to the auditor's aftention which cause the auditor to believethat the data specified in the financial test should be adjusted andthat the company no longer passes the test.

AttachmentL-13-142Page 2 of 3

Based on the information provided in the letter, the NRC needs the followingadditional information to complete its review:

A. Update item 10 of the proposed parental guaranty to comply with theregulations stated above. Specifically, the licensee must provide alternatefinancial assurance within 120 days after the end of the fiscal year, instead ofthe 180 days in the proposed Guaranty, in which the Guarantor fails to meetthe financial test criteria.

B. In addition to the notification to be sent to the NRC 90 days the end of thefiscal year which the Guarantor fails to meet the financial test criteria add therequirement that licensee will inform the NRC within 90 days of any matterscoming to the auditor's attention which cause the auditor to believe that thedata specified in the financial test should be adjusted and that the companyno longer passes the test.

Response

In the existing parental guaranty, FENOC complies with the regulation and wouldprovide alternate financial assurance within 120 days after the end of the fiscal year.The 180 days indicated in ltem 10 of the existing parental guaranty includes time(60 days) for obtaining the written approval of such assurance from the NRC. Likewise,FENOC would comply with the regulation to inform the NRC within 90 days of anymatters coming to the auditor's attention which cause the auditor to believe that the dataspecified in the financial test should be adjusted and that the company no longer passesthe test, without the specific requirement being stated within the parental guaranty. Theexisting parental guaranty follows the guidance provided in the example parentcompany guaranty in Regulatory Guid e 1.159, Ass uring the Availability of Funds forDecommissioning Nuclear Reacfors, Revision 2, dated October 201 1, as beingacceptable for implementing the regulation. However, for additional clarity FENOCamended and restated ltem 10 as provided in the enclosed amended and restatedparental guaranty.

RAI No. 2

Item 14 of the proposed parental guaranty states that "[t]he Guarantor agrees toremain bound under this Guaranty and financial test provisions for as long asFENGenCo must comply with the applicable financial assurance requirements of10 CFR Part 50."

Section lll.G of the Appendix A to 10 CFR Part 30 states:

The parent company guarantee and financial test provisions mustremain in effect until the Gommission has terminated the license,accepted in writing the parent company's alternate financial

AttachmentL-13-142Page 3 of 3

assurances, or accepted in writing the licensee's financialassurances.

Based on the information provided in the application the NRC needs the followingadditional information to complete its review:

A. Update item 14 torequire the Guarantor to remain bound under this Guarantyand financial test provisions until the Commission has terminated the license,accepted in writing the parent company's alternate financial assurances, oraccepted in writing the licensee's financial assurance.

Response

FENOC complies with the regulation, and the existing parental guaranty follows theguidance provided in the example parent company guaranty in Regulatory Guide 1.159as being acceptable for implementing the regulation. However, for additional clarityFENOC amended and restated ltem 14 as provided in the enclosed amended andrestated parental guaranty.

EnclosureL-13-142

Amended and Restated Parental Guaranty(6 pages follow)

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AMEIYDED AITD RESTATED PARENTAL GUARANTY

GUARAIITY, dated as of June !L,2013, made by FirstEnergy Corp., an Ohiocorporation (the "Guarantor") to Guarantor's indirect, wholly owned subsidiary, FirstEnergyNuclear Generation, LLC ("FENGenCo").

WI INE$$ErH:

WHEREAS, FENGenCo is an indirect, wholly owned subsidiary of the Guarantor andhas a 100% undivided ownership interest in Beaver Valley Power Station, Unit No. I("BVPS 1") and 87.42 % of the undivided ownership of the Perry Nuclear Power Plant("Perry");

WHEREAS, the U.S. Nuclear Regulatory Commission ('\IRC") has promulgatedregulations in Title 10, Chapter I of the Code of Federal Regulations ("CFR'), Pd 50 whichrequire that a holder of, or an applicant for, a license issued pr:rsuant to l0 CFR Part 50 provideassurance that funds will be available when needed for required decommissioning activities;

WHEREAS, the Guarantor receives substantial indirect benefits from owning its indirectsubsidiary, FENGenCo (which benefits are hereby acknowledged), and accordingly, desires toexecute and deliver this Guaranty in order to provide financial assurance for FENGenCo'sobligations for the decommissioning of BVPS I and Perry as required by l0 CFR Part 50; and

WHEREAS, this Amended and Restated Parental Guaranty amends and replaces the$95 million Parental Guaranty dated December 17,2012.

NOW, TIffiREFORE, in consideration of the foregoing and other benefits accruing to theGuarantor, the receipt and sufficiency of which are hereby acknowledged, the Grrarantor herebymakes the following representations and waranties to FENGenCo and hereby covenants andagrees as follows:

The Guarantor has full authority and capacity to enter into this Guaranty under its bylaws,articles of incorporation, and the laws of the State of Ohio, its state of incorporation.Guarantor has approval from its Board of Directors to enter into this guaranty.

This Guaranty is being issued so that FENGenCo will be in compliance with regulationsissued by the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of1954, as amended, and the Energy Reorganiz-ationAct of 1974. The NRC has promulgatedregulations in Title 10, Chapter I of the Code of Federal Regulations, Part 50, which requirethat a holder of, or an applicant for, a license issued pusuant to 10 CFR Part 50 provideassurance that funds will be available when needed for required decommissioning activities.

This Guaranty is issued to provide financial assurance for decommissioning activities forBVPS 1, Docket No. 50-334, License No. DPR-66, and Perry, License No. NPF-58,Docket No. 50-440, as required by l0 CFR Part 50. The decommissiotting costs for BVPS Iand Perry are guaranteed in the amount of $ 125 million.

The Guarantor will meet or exceed the criteria from Financial Test II.A.2 from l0 CFRPart 30, Appendix A and agrees to notify FENGenCo and the NRC of any changes in its

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ability to meet the Appendix A criteria in compliance with the notification requirements asspecified in 10 CFR Part 50. Specifically, the Guarantor will possess:

(aXD A current rating of its most recent uninsured, uncollateralized, and unencumberedbond issuance of BBB- or higher as issued by Standard and Poor's, or Baa3 orhigher as rated by Moody's; and

(ii) Tangible net worth is at least $21 million and total net worth of at'least six timesthe amount of decommissioning funds being assr.red by this guarantee; and

(iii) Assets located in the United States amountingto atleast 90 percent of its totalassets or at least six times the current decommissioning cost or Guaranty amount.

The Guarantor has an indirect majority control of the voting stock of FENGenCo.FENGenCo is located at 76 South Main Street, Akron, Ohio 44308. FENGenCo owns theBVPS I facility, License No. DPR-66 and has an 87.42 o/o interest in the Perry facility,License No. NFP-58.

The term "decommissioning activities" as used herein refers to the activities required byl0 CFR Pafi 50 for decommissioning of the facilities identified above.

The Nuclear Decommissioning Master Trust Agreement, entered into with Mellon Bank,N.A. (now, Bank of New York Mellon, a New York state bank having trust powers) onDecember 1, 2A05, was established to maintain funds for decommissioning. This mastertrust agreement sets up the FE BVPS I Nonqualified Fund and the FE Perry NonqualifiedFund, which will serve as the "standby trusts" contemplated by the NRC's regulations forpayment of funds under this guarantee.

For value received from FENGenCo and pursuant to the authority conferred upon theGuarantor, the Guarantor guarantees that if FENGenCo fails to perform the requireddecommissioning activities, as required by License No. DPR-66 and License No. NPF-58,due to lack of funds, the Guarantor shall:

(a) provide all funds necessary, up to the amount of this Guaranty to carry out therequired activities; or

(b) pay into the existing trust fund referenced in Paragraph 7 the amount of thisguaranty for these activities.

The Guarantor agrees to submit revised financial statements, financial test data, and a specialauditor's report and reconciling schedule to the NRC annually within 90 days of the close ofthe parent Guarantor's fiscal year.

The Guarantor and FENGenCo agree that if the Guarantor fails to meet the financial testcriteria at any time after this Guaranty is established, the Guarantor and FENGenCo shallsend, within 90 days of the end of the fiscal year in which the Guarantor fails to meet thefinancial test criteria, written notice to the NRC using NRC's electronic informationexchange. Such written notice also should be made by FENGenCo within 90 days of anymatters coming to the auditor's attention which cause the auditor to believe that the dataspecified in the financial test should be adjusted and that the Guarantor no longer passes the

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test. If FENGenCo fails to provide alternative financial assurance as specified in 10 CFRPart 50, as applicable, whichmustbe submittedtoNRC within 120 days of the end of suchfiscal yeat oi .tpott making notice that the Guarantor no longer passes the test, and obtainwritten approval of such assurance from the NRC within 60 days of the submittal, theGuarantor shall provide such alternative financial assurance in the name of FENGenCo ormake full payment under the Guaranty to the existing standby trust established byFENGenCo.

Independent of any notification under paragaph 8 above, if the NRC determines for anyreason that the Guarantor no longer meets the financial test criteria or that it is disallowedfrom continuing as a Guarantor for the facilities under License No. DPR-66 and LicenseNo. NFP-58, the Guarantor agrees that within 90 days after being notified by the NRC ofsuch determination, an altemative financial assurance mechanism as specified in l0 CFR Part50 as applicable, shall be established by the Guarantor in the name of FENGenCo wrlessFENGenCo has done so.

The Guarantor as well as its successors and assigns shall remain bound jointly and severallyunder this Guaranty notwithstanding any or all of the following: amendment or modificationof license or NRC-approved decommissioning funding plan for that facility, the extension orreduction of thg timi of perfonnance of required activities, or any other modification oralteration of an obligation of FENGenCo pursuant to l0 CFR Part 50.

The Guarantor agrees that it will be liable for all litigation costs incurred by FENGenCo orthe NRC in any successful effort to enforce the agreement against the Guarantor.

The Guarantor agrees to remain bound under this Guaranty and financial test provisions forthe previously listed facilities until the Commission has terminated the licenses, accepted inwriting the parent company's alternate financial assurances, or accepted in writing thelicensee's financial assurance, except that this Guaranty may be amended by the agreementof Guarantor and FENGenCo with 30 days prior written notice to the NRC, and except thatthe Guarantor may cancel this Guaranty by sending written notice to the NRC using NRC'selectronic information exchange, such cancellation to become effective no earlier than 120days after receipt of such notice by the NRC as evidenced by the return receipts. Guarantorshall also notify FENGenCo. If FENGenCo fails to provide alternative finansial assurance asspecified in l0 CFR Part 50, as applicable, and obtain written approval of such assurancewithin 120 days after the sending of the above notice by the Guarantor, the Guarantor shallprovide such alternative financial asstrance, or make full payment under the Guaranty to theexisting standby tust established by FENGenCo.

The Guarantor expressly waives notice of acceptance of this Guaranty by the NRC or byFENGenCo. The Guarantor also expressly waives notice of amendments or modification ofthe decommissioning requirements and of amendments or modifications of the licenses.

The Guarantor files financial reports with the U.S. Securities and Exchange Commission(SEC), which are available to NRC and need not be submitted separately in accordance withl0 cFR s0.71(b).

The Guarantor agrees that if the Guarantor admits in writing its inability to pay its debtsgenerally, or makes a general assignment for the benefit of creditors, or any proceeding is

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instituted by or against the Guarantor seeking to adjudicate it as bankrupt or insolvent, orseeking dissolution, liquidation, winding-up, reor ganization, arrangement, adjustment,protection, relief or composition of it or its debts under any law relating to bankruptcy,insolvency, or reorganization or relief of debtors, or seeking the entry of an order for relief orthe appointment of a receiver, trustee, custodian, or other similar official for the Guarantor orfor any substantial part of its property, or the Guarantor takes any action to authorize oreffect any of the actions stated in this paragraph, the Commission may:

(a) declare that the financial assurance guaranteed by the this Guaranty is immediatelydue and payable to the existing trust referenced in Paragraph 7, without diligence,presentment, demffid, protest, or any other notice of any kind, all of which areexpressly waived by Guarantor; or

(b) exercise any and all of its other rights under applicable law.

The Guarantor agrees to notiS the NRC, in writing, immediately following the filing of avoluntary or involuntary petition for bankruptcy under any chapter of title l l @ankruptcy) ofthe United States Code, or the occrurence of any other event listed in ParagraphlT, by oragainst:

(a) the Guarantor;

(b) FENGenCo;

(c) an entity (as thatterm is defined in ll U.S.C. 101(15)) controlling FENGenCo orlisting the license or FENGenCo as properfy of the estate; or

(d) an affiliate (as that term is defined in 11 U.S.C. 101(2) of FENGenCo.

The notification required by Paragraph 18 must include the following:

(a) a description of the event, including major creditors, the amounts involved, and theactions taken to assure that the amount of funds guaranteed by this Guaranty fordecommissioning will be transferred to the existing trust referenced in Paragraph 7 assoon as possible;

(b) if apetition of bankruptcy was filed, the identity ofthe bankruptcy court in whichthepetition for bankruptcy was filed; and

(c) the date of filing of any petitions.

This Guaranty and the rights and obligations of the FENGenCo and the Guarantor hereunder,shall be governed by and construed in accordance with the domestic laws of the State of Ohiowithout giving effect to any choice or conflict-of-law provision or rule (whether of Ohio orany other jurisdiction) that would cause the application of the laws of any jurisdiction otherthan Ohio. The Guarantor and the FENGenCo each consent to the exclusive jurisdiction andvenue of any state or federal court within the State of Ohio for adjudication of any suit,claim, action or other proceeding at law or in equity relating to this Guaranty, or to anytransaction contemplated hereby. The Guarantor and FENGenCo each accept, generally and

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unconditionally, the exclusive jwisdiction and venue of the aforesaid cowts and waive anyobjection as to venue, and any defense of forum non conveniens. The Guarantor herebyirrevocably consents to the service of process out of any of the aforementioned courts in anysuch action or proceeding by the mailing of copies thereof by registered or certified mail,postage prepaid, to the Guarantor at its address set fonh opposite its signature below, suchservice to become effective 30 days after such mailing. Nothing herein shall affect the rightof FENGenCo to serve process in any other manner permitted by law or to commence legalproceedings or otherwise proceed against the Guarantor in any other jurisdiction. TheGuarantor hereby irrevocably waives any objection which it may now or hereafter have to thelaying of venue of any of the aforesaid actions or proceedings arising out of or in connectionwith the Guaranty brought in the courts referred to above and hereby further irrevocablywaives and agrees not to plead or claim in any such court that any such action or proceedingbrought itt aoy such court has been brought in an inconvenient forum.

All notices and other communications hereunder shall be made to FirstEnergy Corp.'s ChiefFinancial Officer and General Counsel at 76 South Main Street, Akron, Ohio 44308.

If it is ever determined that the Guaranty dated December 19, 2011, or any prior Guaranty,remains enforceable and not properly cancelled, revoked and rescinded with no further forceand effect, than the amount of this Guaranty specified in Paragraph 3 hereof shall be reducedby the amount specified in such prior guaranty which remains in effect.

This Amended and Restated Parental Guaranty shall amend and replace the existing$95 million Parental Guaranty dated December 17,20L2, which took effect on April 16,2013 , 120 days after the December 17 , 2012 notice submitted to NRC, and which cancelledthe prior Guaranty dated December 19, 20lL This Amended and Restated Parental Guarantyshall be effective 30 days after receipt by the NRC of written notice of these amendments,unless a written notice of objection by NRC is received within such 30 days.

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I hereby certiff that this Guaranty is true and correct to the best of my knowledge.

Eflective date:

FirstEnergy Corp.

,, t /)',&*

sAMA{rttA"lffioH1oNoTARY PuqTq"-'R"*rded in tj$Hry zo:ilMy commiseion ex

Steven R. StaubVice President & Treasurer

STATE OF OHIOCOUNTY OF SUMMIT

Subscribed and sworn to me, a Notary Public, in and for the City/County and State abovenamed, this 11th day of June, 2013.

SAI,IANTIIA B. SARATI c1 CT-\ A r- INOTARy pUBgC. STATE OF OHIO lraL,vltarruDltA:6t lwt 4-h-

Reoorded in Sununit CountyMy commission expires D€c.21 ,2014 My Commission Expires:Dg=g . e\ . AO\.{

FirstEnergy Nuclear Gengation, LLC

By

Rhonda S. FeffinVice President & C

STATE OF OHIOCOUNTY OF SUMMIT

Subscribed and sworn to me, a Notary Public, in and for the City/County and State abovenamed, this gth day of June, 2013.

q* ffigf;*^^IOMy Commission Expires: t\ec. Al , ADltt

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