ML17214A781
| ML17214A781 | |
| Person / Time | |
|---|---|
| Site: | Duane Arnold  |
| Issue date: | 10/14/1983 |
| From: | Denise Wilson, Keith Young IES UTILITIES INC., (FORMERLY IOWA ELECTRIC LIGHT |
| To: | |
| Shared Package | |
| ML112410302 | List: |
| References | |
| PROC-831014-01, NUDOCS 8311080176 | |
| Download: ML17214A781 (138) | |
Text
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r UNITED STATES OF AFRICA
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FEDERAL ENERGY REGULATORY COMMISSION 1
6
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ee e I'I>'I. ~
~ ~. 6 FLORIDA POWER L LIGHT COMPANY
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Docket No.
ER-83-523-000 ANSWER OF FLORIDA POWER 4
LIG11T COMPANY TO STAFF"S MOTION TO REQUIRE FILING
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Il I.
INTRODUCTION In 1978, in Docket No. ER78-19 (Phase II) the Staff sought to require Florida power a I.ight Company
("FpL") to file a tariff incorporating FPL's policies concerning the circum-stances in which FPL would make transmission service availee able to other utilities.
Ultimately, in 1981, the Staff's AF position was re)ected by unanimous decision of a panel of
- =-.. 'he United States Court of Appeal for the Fifth Circuit, which held that the Staff's position represented an unlawful attempt to assume 5urisdiction that had been deliberately
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withheld from the Commission by Congress.
Now, two years following the court's rebuff, he Staff renews its effort in a slightly difierent guise.
The Sta i, by Motion dated October 14, 1983, requests an order requiring FPL to file with the Commission, as "practices" affecting service under one or more rate schedules on file with the Comr.ission, conditions attached to a Nuc'ear Regulatory 0
1/
Fla"ida Power [ Lj ht C
C~11. 9, metron to va "ate Cir. 8/16/82~cert.
- dented, FERC, 660 F.
2d 668 (5th
- ended, No.
80-5259 (5th 103 S.Ct.
800 (1983).
9 3 I(e 50(+6
Comm'ss'on l"NRC
) license that requir FPL t e
o contract to provide transmission service in certain instanc FP
'n ins ances.
FPL op-poses the m"tion an" submits this Answer, pursuant to Rule 213 oi the Com.=ission's Revised Rules f
P 2/
e o
ractice and Procedure.
II'ROCEDURAL AND FACTUAL BACKGROUND (r(
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The Staff brought the instant motion in the context of 3/
a hearing on a Transmission Agreement, submitted for filing in the 'above-captioned
- docket, under which PPL mould p~ovide transmission service for the. output of t~o 600 MW coal plants being constructed by Seminole Electric Coopera-4/
tive, Inc.
("Seminole" ).
The background of the dispute between FPL and Seminole has been discussed in orders
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Contemporaneously vith the filing of this Anger, PPL is suhiitting a motion for certification to the Ccemisee sion, pursuant to Ru)e 7)i.
FPL maintains that the-.
Commission is the proper forum to decide the issue-raised by the Staff's Motion.
By certifying the question to the Coaaaission, this result can be achieved vithout the need of examining the respective Jurisdictions of the Presiding Administrative La~ Judge and the Commission-Should the need for such an examination arise,
- however, FPh sets (orth in Part ZV, infra, its argument that the Judge does not have ]urisdictton to decide the question presented by the Staff.
3/
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Agreement to Provide Specified Transmission Service between Florida Power 4 Light Co.
and Seminole Electric Cooperative, Inc. (Hereafter, "Transmission Agreement" )
Sem nole U..i
!i~.
1 @as expected to be in commercial operation by now, but has been delayed because of mechanical problems encountered during testing.
Seminole Unit ho.
2 is projected to enter commercial ope"ation on Janua~
1, 1985.
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of the Commission in three dockets.
The facts pertinent to the cur ent issue are as follows.
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In January
- l982, FPL and Seminole entered into an In-6/
terconnection Agreement
- which, among other things, ob-ligated FPL to provide certain transmission service for power produced by the Seminole Plant.
The Interconnection Agreement expressly acknowledges that, particularly until a 500 KV system under construction by FPL is completed in mid-
- 1985, FPL lacks sufficient transmission capacity to guarantee that it will transmit the pover generated by Seminole at all times.
Consequently>
the Interconnection Agreement specifies that the Transmission Agreement (the sub)ect of the present proceeding) will contain limiting provisions that permit FPL to discontinue transmission service when it is necessary to do so in order to protect the reliability of FPL's system or to avoid interference with FPL's uie of ita transmission J7 system to provide economical service to FPL's own customers.
The dispute arose
- because, in the first half of 1983$
Seminole suddenly announced that, contrary to its previously 5/
6/
7/
See Commission Order dated September 23, 1983, in 5ocket No.
EL 83-24-000 and 83-24-001; Commission Order dated September 22, 1982, in Southern Com an
- Services, Inc.g 20 FERC
% 61,332 (Docket No.
ER 82 54
- Commxssxon Or er dated July 21, 1983, in the instant docket, 24 FERC 1 61,089.
Interconnec"ion Agrccmcnt between Florida Power a Light Co.
and Seminole Electric Cooperative, Inc.
(January 6<
1982) i accepted o" filing March 15, 1982, Docket No.82-307.
Interconnection Agreement, Sections 3.3 and 3.4.
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announced plans, it intends to use a portion of the output of.he Seminole Plant to serve the load of cooperatives that currently receive their power from delivery points on FPL's system.
In order to implement these new plans, Seminole now desires "firm" transmission service, which means that it wants to eliminate from the Transmission Agreement the limiting provisions discussed above.
To achieve this cnd, despite having agreed to the limitina provisions and having contractually acknowledged that they were necessitated by transmission capacity limitations, Seminole resorts to an argument that the Nuclear Regulatory Cceeission license conditions here in issue supersede the Interconnection Agreemcnt on file with the FERC and require that FPL provide the firm transaission Qe service sought by Seminole.
FPL has pointed out thats (1) the license conditions, far from superseding the Interconnection Agreement, vere in fact imposed by the NRC in Apri1 1981, some nine months before the Interconnection Agreement was cxecutcdg t2) the license conditions require FPL to provide transmission service only if "the services can reasonably be accaamodated without significantly jeopardizing tFPL's) reliability cr its use of transmission facilities," circumstances which 8/
Florida power c Li ht Co., Docket No. ER83-523, 'protestt Motion to Intervene, Notion fcr One Day Suspension<
and quest for Hearing Filed on Behalf of Seminole Electric
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Cooperative, Inc., et al."
(6/21/83), at 6-12 The pro visions of the license, conditions that the Staff seeks have, filed,with the Commission are attached as Appendix A too,thi.s..-.Answe".
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patently are not present in this case; and (3) in any
- event, compliance or non-compliance with Nuclear Regulatory Commission license conditions is not properly in issue 10/
before this Cor-.,ission.
The Staf f filed its motion in response
.o this third point.
ZZZ.
ARGUMENT A.
There Mill Be No Legitimate Purpose Served By Ordering FPL to File the NRC License Conditions in This FERC Case As is apparent from the foregoing, there can be no legitimate claim that the NRC license conditions were vio-lated in this case.
FPL can easily prove that its trans-mission facilities lack the capacity to provide the firm service sought by Seminole without "significantly feopardising ll/
fFPL's} reliability or its use of transmission facilities.
The issue presented hy the Staff's motion is whether the Staff can use this case as a stepping stone toward attaining 9/
The Staff refers
{motion p.
- 4) to a provision of the license conditions requiring FPL to "include (in its planning) sufficient transmission capacity as required by these entities" (license conditions, X(c) ).
In-explicably, the Staff neglects to acknowledge the qualifying phrase that immediately follows the quoted language:
"provided that [the entities desiring transmission service) provide the Company with suf-ficient advance notice of their requirements an<<on-
'ract in a timely manner to reimburse the companyr costs
. "(Id.)
The Commission has found that Seminole did not give FPL unequivocal notice until May 20, 1983 of the change in its.plans that prompted the reques for firm transmission service.
Commission
- Order, September 23 '983E Docket No.
EL 83-24 Accordingly, the provision quoted by the Staff has no relevance whatsoever..
10/
See FPL's Principal Memorandum on the Scope of the Proceeding filed on September 12, 1983 in this proceedinqE at 6-7 12-14
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See testimony of G.
R. Cepero, filed in this docket on September
.".~, 1983.
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3 i e of continuing and pe vasive jurisdic-tion over a
ublic ut'tility s policy concerning access to its 12/
transmission service.
Zn sections B and C below, we discuss the legal reasons why the Staff's motion must be denied, namely:
(1) Granting the motion would expand the transmission service obligations voluntarily undertaken by FPL, in violation of the Fifth Circuss decision in Florida Power f Li ht Co. v.
FERC and decisions of other courts.
(2)
The language "practices... affecting...
rates and charges" refers only to practices that affect the operation of a rate
- schedule, i.e.< the charges exacted and the terms and conditions of service, and not to the considerations that prompt a utility to offer a rate schedule in the first place.
Before turning to these legal issues,
- however, we first address the practical impact of the Commission's disposition of this motion.
The Staff argues that a grant of the motion would have little or no practical impact upon FPL, with the unspoken premise that the public interest would be served in some way by granting the motion.
Both oi these claims are
- wrong, and should be dispelled at the outset.
ith the exception of the unusual situation caused by 12/
wi Seminole's abrupt change in its plans for use of the output of the Seminole Plant, there is no dispute pending as to FPL's transmission service policies.
FPL has contracted to provide transmission service to every municipal and investor-owned utility in Florida that has sought such service, dhd tc'Se contracts are on file 'with the Commission.
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1.
Substantial Harm May Result From a Grant of the Staff's Motion The Staff, in an effort to avoid the ruling of Florida Powe=
a Li ht Co. v.
FERC, contends Mat the instant case is dis inguishable.
The case before the Fifth Circuit involved internal policies of FPL which FPL was free to change at will, absent being compelled to file those policies with the h
Commission, while the instant case involves conditions that FPL is not free to change unilaterally.
Therefore, the Staff argues,,"requiring FPCL to file the conditions doe's not in any manner expand FP4L's wheeling obligations beyond those it has already committed itself to undertake."
(Staff motion, p. 7).
The Staff is right about one thing!
in order.to surmount the barrier of the Fifth Circuit's decision, it must demonstrate that granting the motion would not expand FPL's wheeling obligations.
That, however, it cannot show..
A grant of the motion would 'enable the Commission to expand FPL's wheeling obligations in any of the following ways:
a.
By requiring the Nuclear Regulatory Commission license conditions to be filed under g 205(c) of'he Federal Power Act, 16 Q.S.C.
$ 824d(c), the Commission would obtain jurisdiction that completely duplicates that of the NRC to interpret those license conditions. lf the Commission were to read a provision of the license condictions more broadly than the NRC, FPL would be compelled to adhere to the Commission's
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broader interpretation.
This, standing
- alone, adversely af fects FPL; the unfairness is even greate because of the circumstances surrounding the settlement a
the NRC that produced the license con"itions.
The license conditions were.negotiated over a long period of time with the NRC' antitrust staff.
These negotiations included extensive dis-cussion of the language of the conditions, much of which was honed by the NRC Staff in negotiations with other licensees over a period of years.
There exists at the NRC an institu-tional memory of the evolution of this language<
and this results in a significant degree of predictability as to how the NRC Staff would resolve a dispute over interpretation of
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the conditions.
FPL entered into the NRC settlement in the good faith belief that the license conditions would be interpreted within this NRC process.
To now bind FPL to accept the less favorable of two interpretations that may be rendered by agencies claiming co-equal jurisdiction, with one agency having nothing to guide it,but cold print, assuredly permits expansion of the ~heeling obligations voluntarily undertaken by FPL.
b.
At such time as FPL is relieved of its ob-ligations under the NRC license, eitl er by su render of that license or by an order of the NRC deleting one or all o-the license conditions, FPL would still remain obligated to 0
The NRC has delegated substantial enforcement powers to itq staff, which has the authority to institute an en orcement action in any particula" case.
10 C.F.R-S 2, Subpart B (1983).
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corno'y with the license conci ions because they wou'd be Commission
~ until and unless FPL ob ained the Com...'ssion's approval to withdraw or modify the filed schedule.
c.
Perhaps the most imminent risk is that the Commission will modify the hRC license conditions once they are filed, and thus directly expand FPL's obligations.
This is happening in the case of pacific Gas and Electric Companyg g uti 1ity t to FPL '
knowledge ) that has been required to'file the transmission provisions of NRC license condi-14/
tions.
The Staff 's claim that a grant of its motion "does not in any manner expand (FPL's) wheeling obligations" is therefore disingenuous.
The izRC would obtain the power to interpret, perpetuate and change the filed license conditions situation, such as ancillary )urisdictiong and exhaustion of administrative remedies.
1 Z/
to govern the
=rie doctrine Zn addition, as is indicated by the foregoing illustrations f when two different forums have )urisdiction over the same matter there is a significant risk of duplicative proceedings and conflicting interpretations.
When dual )urisdiction occurs in the federal and state courts, and between courts and agencies<
there are long-established rules and principles 14/
t See Pacific Gas a Electric Co.,
24 FERC f 63,00
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See E ie Railroad v. Tom~kins
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304 U-ST
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10 In this case,
- however, where De conflict, would arise between two different administrative
- agencies, there are no such procedures, making the situation untenable.
For this reason the courts have held that an administrative agency's jurisdiction to interpret and enforce its own licenses is exclusive.
See, e~, Swift C Co. v. United States, 316 U.S.
- 216, 232-33 (19C2);
See also Sus uehanna Valle Alliance v. Three Pile Island, 619 F.2d 231 237-38 (3d Cir. 1980).
2.
Granting the Notion Will Hot Produce Any Positive Result In contrast, there is no countervailing benefit to bc gained by granting the Staff's motion (putting aside any interest in indirectly acquiring jurisdiction, as described in 1, above, that the Commission lacks under the Federal
/16
~J Power Act).
The Staff suggests that the license conditions should be filed because "the extent to which the transmission agreement is anticompetitive is an issue in the proceeding."
Staff motion, p. 3.
Assuming, for the moment, that the question of possible anticompetitive effect of the Transmission Agreement is properly in issue in the proceeding, the Staff'ails to explain how filing the license conditions will assist the Commission in its resolution of that issue.
Whatever power the Commission has under the Federal Power The Staff does not ques"ion the NRC's power and demon-strated abilitv to enforce the provisions of its li-censes without any help from this Commission.
gled
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Act to adjudicate such issues and to take remedial action it "an exercise fu'ly regardless of the disposition of the 17/
S aff's mo=ione I'o the extent that the 'license conditions provide intellectual guidance in this endeavor, they areI available for the Administrative Law Judge and the Commis-sion to read and cite, vithout the ncccssity of requiring that they be filed as a rate schedule.
~~reovcr, Connrcss has vested the Commission with broad authority to order wheeling, and to orescrihe the terms and condiee tions therefor, under Section 211 of PQRPA, 16 U.S.C.
S 824k.
The Commission need not conduct an antitrust investigation in order to exercise this authority.
All that it need do is make certain essentially technical (in the sense of engineering) findings> including that its order vill not impose "an undue
'urden" upon the wheeling utility or result in an."uncom-pensated economic loss."
Proceedings under Section 211 can be triggered in this situation by the filing of an application by Seminole.
Seminole's failure to seek relief under Section 211 illustrates the spurious nature of the allegation that.
the Trans.-..ission Agreement is anticompetitive.
If anY 17/
One court of appeals has said that, even when it finds an anticompetitive ef e"t, the Commission may not issue an order that expands a utility' wheeling obligation without first making the findings prescribed by Sec-tions 211 and 2l2 o. tho Public Utility Regulatory policies A"t of 1978.
New York State Electric. s Gas Cor
. v.
- FKRC, 638 P.2d Clr ~
cer.t.
aen ea, 4n4 U.8.
821 (1981).
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quest'on exists as to the validity of FFL's claim that exist'ng transm'ssion capacity, is inadequate to accommodate Seminole's request for firm transmission service without inter'ering with FPL's own use of its transmission'system, that question could be resolved, and the relief sought by Semin" le could be granted, under Section 211.
If, on the other hand, FPL's claim of inadequate capacity is valid, that is determinative of any antitrust issue.
The courts have uniformly held that antitrust policy docs not require the owner of even an essential facility to relinquish its ovn use of the facility in order to accommodate the desires of others.
See, e~,
Hecht v. Pro Football, Inc.,
570 P.2d
- 982, 992-93 (D.C. Cir. 1977), cert. denied, 436 U.S.
956
.(1978)
( (T]he antitrust laws do not require that an essential facility be shared if such sharing
. would inhibit the defendant's ability to serve its customers adequately) t GAMCO,'nc. v. Providence Fruit a Produce Bld., Inc.,
194 F.2d 484 (1st Cir. 1952);
see also MCI Communications Cor
. v.
AT&T Co.,
708 28d 1081, 1133 (7th Cir 1983.), cert deni.ed, 52 U.S. L.M. 3280 (Oct.
11 1983)
(Nos.
83-21, 83-32 83-217) -
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In a recent case the Commission emphasized that restrictive provisions in a rate schedule would be found anticompetitive only if there were a demonstrably unreasonable effect on competition.
Kentucky Utilities Co-<
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13-In summary, no legitimate interest would be served by requiring FPL to file the license conditions.
The NRC will assure FPL's compliance with the license con"itions, and the FERC has ample statutory authority to resolve the wheeling dispute between Seminole and FPL without resorting to the ploy proposed by the Staff.
B.
The Commission Is.Precluded From Granting The Staf f' Notion By The Decision Of The Fifth Circuit in Florida Power k Li ht Com an v.
F.FoR.C.
The Staff devotes a aa$ or portion of its motion to an attempt to distinguish this case from the Fifth Circuit's decision in Florida power c, Li ht Co. u. F.E.R.e.
Staff Motion< pp. 5-8.
For under the holding of Florida Power t Li ht, the Commission would not have the power to grant the relief requested by the Staff.
Florida Power
& Li ht arose out of a Commission order requiring FPL to include as part of a tariff a Company policy regarding the availability of transmission
("wheeling" ) services.
660 F.2d at 670-72.
FPL ob)ected that filing this policy would have the consequence of unlawfully compelling FPL to wheel and would thereby operate to convert FPL into a common carrier oZ transmission services.
660 F.2d at 669.
The court no ed that the parties agreed that "ts]o long as the tariff and policy remain on file, they are to be treated as a
sta=ute, binding upon FPEL and the purchaser ali'ce" and the e ore the filing wou'd have a compulsory e
ect.
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a The consequence would be to require FPL to serve all qualifying customers until the Commission changes the availability criteria A customer refused such service could petition the Commission to find that FP&LPs practice with respect to its policy of availability is unduly discriminatory under S
206 of the FPA.
660 F.2d at 675.
The Federal Power Act, however, neither requires utilities to wheel nor, with the exception of Section 211 oz PURPA, authorizes the Commission to compel wheeling.
Moreover, legislation which would have imposed an absolute obligation upon utilities to wheel has never been enacted.
In addition, "the courts have rejected ingenious arguments which would have established the Commission's authority
~19 to require ~heeling by indirect means."
660 F.2d at 6'72-73.
Before the Fifth Circuit the Commission argued, among other things, that since.the order 'in no way expanded=
the transmission service obligation which FPL has voluntarily undertaken" and because "FP4L has given no indication it desires to change its policy" the order in no way compelled FPL to wheel.
660 F.2d at 674.
The Fifth Circuit examined this argument and rejected it.
Zt recognized no only that the effect of the order would be to deprive FPL o. the freedom to alter its policy," but also that the filing requirement would confer upon the Commission author-ity it would not otherwise have to require FpL to "adjust f
19/
Colitic New Yock State Electric a Gae Cor
. r.
PERC 638 F.2d 388 (2nd Cir. 1980), cert.
- denied, 454 U.S.
821 (1981);
Richmond power a Lr ht o" Roc ~iced, In"iana v. FERC, 5
4 Fa2d 0
(D.C. Car.
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the tariff and po1icy.>>
.he Commission in the orders on review clearlY indicated that in the future it may require FPaL, either in Docket "o.77-175 or in some other proceeding to amend its tariff if it is found to be unjust or unreasonable.
(J.A. p.
2210.)
This would include FPaL's policy of availability.
Thus, if there is a tariff, the Commission could in the future alter FPaL's policy to one undesired by FPCL's management..
l4e agree with FPCL that the Commission's order does in efiect impose common carrier status upon FPaL The imposition ot common carrier status on FP4L, which the orders at issue accomplish, is precisely the authority which the FPA denies the Commission.
The legislative history of the FPA makes clear thit the Commission lacks the authority to require electric utilities to provide wheeling even on a reasonable request.
Accordingly<
we conclude that the Commission lacked statutory authority to issue the orders in question.
660 F.2d at 676; foctnote omitted.
In addition, the court expressly re)ected the Commission's argument, that "FPCL's availability policy constituted a
'practice'ithin the meaning of 5 205(c} of the FPA" and the Commission's regulations.
The Court responded that:
"Giving the Commission the a
n the authority to order a policy of availability to be filed a led as a
practice could vitiate Congress'esire I
to leave utilities free to make wheeling decisions."
660 F.2d at 677.
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16 With its motion, the Sta'. is attempting to achieve essentially the sa;-e result here as it attempted before in Flor'da Power a Licht.
The S aff's efforts to distinguish Florida Power a Light are transparently lacking in merit.
The Staff's principal ground for distinction is that the statement of policy involved in Florida Power 4 Li ht
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had no legal effect.
When the Commission ordered FPCL to file its statement of policy as a practice, FPCL, according to the Court, "lost the freedom to alter its policy of availability with respect to wheeling
- Here, by contrast, FPtL has already
'lost the freedom to alter its policy of availability with respect to wheeling".
Unlike the situation in FPCL, FPSL cannot unilaterally modi~yts commitments without violating the law as embodied
'in the MRC conditions.. The fact that FPCL transmission obligations set forth in the HRC license conditions are legally binding demonstrates that requiring FPtL to file the conditions does not in any manner expand FPaL's wheeling obliga-tions beyond those which it has already committed itself to undertake.
Staf f Motion, p. 7.
Reason and the express language of the Fifth Circuit demonstrate that this statement is erroneous.
Filing would confer upon the FERC authority it does not now have to require FPL to amend the filed conditions.
660 F.2d at 676.
Consequently, il'ng would do far more than merely con irm ob'igations already undertaken by or imposed upon FPL.
It would subject FPL tc a regulatory regime over its transmission
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17 practices which the NRC license conditiohs do not by them<<
selves impose upon the Company.
So viewed, the distinction between a voluntarily adopted practice and a legal obligation imposed by an authority other than the FERC is one without 20/
a difference. In either event, the filing of the policy or conditions confers upon the FERC authority it now lacks to alter existing practices.
In this connection, it should be emphasised that FPL has submitted the Transmission Agreement for filing in this docket, so that the terms and conditions under which FPL will provide transmission service from Seminole's new coal plants are already before the Commission.
The requirements contained in the NRC license do not simply relate to the
'ransmission of pover generated by Seminole.
They relate, generally, to the terms under which FPL shall transmit power for "neighboring ent'ties" or "neighboring distribution systems.'onsequently, the Staff Motion is not simply'an attempt to ensure that there will be equitable terms for transmission from Seminole's coal plants; it is, instead, an attempt to obtain far wider authority over FPL's transmission practices.
20/
Moreover, if the Staff's theory were to be adopted and carried to its logical conclusion, utilities would be required to file material such as the injunction issued by the U.S. District Court in United States
- v. Otter Tail Power Co.,
331 F. Supp.
54 D. Mann.
a U..
1973)
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=he Staff further argues that this case is governed by Commission s order in Paci.ic Gas and Electric Comoan 11 FEnc i 61,246 (1980), aff'd mem., pacific das and Electric Co. v.
- FKRC, 679 F.2d 262 (D.C. Cir.
1982)
("PGaE").
Staff Motion, p.
4.
he submit it is not.
- First, even if PGCE 21/
vere othervise of precedential significance, its significance e
has been vitiated by Florida Power C Li ht.
The Commission's Florida power c Li ht decision vas issued on December 219 I
e'979.
That decision was reversed by the Fifth Circuit on e
November 6,
1981.
The Commission's PGcE decision vas issued on June 2,
1980, before the Fifth Circuit's reversal in Florida e
~
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if*
ee POTE vas affirmed hy the Court of Appeals for the District of Columbia Circuit, on Nay 17, 1982, after the Fifth Circuit's decision in Florida Power s Li htg hovever, contrary to the implication of, the Staff, the District of Columbia Circuit's 21/
Although thc Commission, in deciding PGCE, relied on Florida Power a Li ht, the PGcE decision also rests upon a second rationale.
Since,PGaE had advanced its NRC license conditions as a Zeecnse in a proceeding before the FERC, and had asked the FERC to withhold action against PGaE in reliance on the license conditions, the FERC had acquired an interest independent of the NRC in perpetuating and reserving, the right to interpret the PGKE license conditions.
- PGGK, 18 FERC at pp. 61,485~
22/
"This was the very argument the Commission made in its argument to the Court of Appeals in Pacific Gas and Electric Co. v. FERC, 679 F.2d 262 (D.C. Clr.
- Noreover, a
was affirmed after the Florida Power and Li Et Decision."
Staff Motion, p.: 7 (footnote omitted).
F I
p,
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R Jf
.Cia
precis on is without precedential effect since it was issued witho opinion.
679 F.2d 261, 263.
MOreOVer,, in view Of the faCt that FPL' prinCipa1 place of business is in the Eleventh Circuit (part of the former Fifth Circuit) and that FPL has the right to appeal any FERC decision to that circuit, it is disingenuous to suggest (as the Staff does) that the FERC is not bound by that decision "(e]xcept where review in the Fifth Circuit were inevitable."
Staff Motion, p.
8 n.5.
A number of courts ot appeals, reviewing agency decisions in conflict with their own on matters of statutory interpretation, have expressed the view that "as must a district court, an agency 23/
is bound to follow the law of the Circuit."
23/
Ithaca Colle e v. NLRB, 623 F.2d 224, 228 (2nd Cir. 1980)
~
ce a so e
en eneral Sos ital v. NLRB, 608 P2d 965, 970 75rd~Cr.
9
(
0 ur u gmcnts...are nding on all inferior courts and litigants in the Third Judicial District, and also on administrative agencies....Por the Board to predicate an order on its disagreement with this Court's interpretation of a statute is for it to operate outside the law.") i Federal-Mo ul Cor
- v. NLRB, 566 F2d 1245, 1252 (5th Car.
an
~agency decision is not in accord with the opinions of this Court, the decision will be reversed and enforce-ment denied");
PPG Industries, Inc. v. NLRB, 671 F.2d 817, 823 n 9 (4th Cir. 1982)
It xs thc uty o t e to apply the law of the Circuit."); Stacc Manufacturin Com an
- v. Commissioner, 237 F.2d 6
t lr~
PTjj privileged to disregard and refuse to follow, as the I
settled law of the circui, an opinion of the court of appeals for that circuit.... tt]he mere fact that it is a court having jurisdiction in tax cases throughout the United States does not establish the tax court as superior in any aspect to United States Distric Courts.")
'C<
~
~ ~
C
~
~
II
~ S,7' 1
C ll t
Oy CI
20 24/
F o. isa Pm r S L'c".. is the controlling law, and the Sta".'s position canno" be reconciled vith the Fifth Circuit's decision.
Rather than devising "ingenious arguments tto]
establish(ed]
the Commission's authority to reauire wheeling by indirect means,",
660 F.2d at 672-3, the Staff should abide by the law until such time as it is changed by Congress, if in fact Congress sees fi to change it.
C.
The NRC License Conditions Are Not "Practices" Mithin the Heanin of the Federal Poser Act In addition, the Staff's argument that the NRC license
.r conditions are 'practices within the meaning of 5 205(c) of
~r the Federal Po~er Act ignores the very purpose of that
~25 Section.
This purpose of 5 205 is evident from the 21/
gl 25/
See Reiter, C
tition and Access to the Bottlenecks
'ttte Sc e of ontract azr er e
at on un er t e e era Pcnrer an Natura Gas
- cts, an an ater
~
ev ~
c a
oug it pioposes "avenues of relief" to circumvent the restriction,. recognixes that the Federal Pcwer Act does not authorise the Commission to compel +heeling.
The Staff suggests that the license conditions represent a contract which "affect(s) or relate fs] to rates,
- charges, classifications, and services" under the Transmission Agreement.
Federal Paver Act/ $ 205(c)
~
Apparently, the Staff believes that the reference to "contracts" in Section 205(c) is broader than the reference to "practices,"
and it rests its contract" theory on the fact that the NRC license conditions resulted from a settlement reached in the NRC licensing proceeding.
The Staff's viev lacks merit, for three reasons.
First, the fair reading of Section 205(c) is that the reference to contracts, like the reference to."practices~"
refers to contracts that affect or relate to implementa-tion of the rate schedule.
(Footnote continued on next page)
"ol'h
~ '~r~ "~"
any
~ 0
t 1'tp k
C 4'
I I
I A
A4 "4~% Aki4L
21 structure of the Ac..
As the court states in Municipal Li ht Boa ds of Readin and Nakcfield Massachusetts v.
Federal Power Commission, 455 F.2ci 1341, 1348 (D.C. Cir.
1971), ce=t.
- denied, 4&5 U.&. 9&9 (1972), the "prima"y aim (of thc Federal Power Ace) is the protection of consumers from excessive rates and charges."
To achieve this goal, the Federal Power Act requires utilities to file their rate shcedules with the Ccnnmission, under S 205, and each such rate schedule is to contain all the terms and conditions under vhich service is provided.
M~ehicean Wisconsin Pi e Line Co.,
34 FPC 621 626 (1965)
~
In this way, rates and services offered become Public informationp so that customers are aware of and can challenge them<
and 25/
(Footnote continued from previous page)
- Second, FPL is not bound to the license conditions by virtue of any agreement, but by virtue of NRC action pursuant to Section 105c.(6) of the Atomic Energy Act (42 U.S.C.
S 2135(c) (6)) relating to "Antitrust Provisions and which authorises the NRC "to issue a
license with such conditions as it deems appropriate."
To be sure, those conditions vere imposed by the NRC after proceedings had been conducted pursuant to Section 105c.
and the parties had agreed to settle their differences, with FPL consenting to the incorporation of the conditions in the license.
However, there is no independent consensual agreement by FPL to comply with the license conditions; that obligation results only from the Board's order incorporating them into the license.
Finally> common sense tells one that a settlement en ered into in the context of a contested administra-tive proceeding should not be regarded differently from an order issued in that proceeding.
Does the Staff seriously suggest that those utilities that settled HRC licensing proceedings should be required to file their license conditions with <the FERc:, while those that had co&i=iona imposed lrloiovg nra co.nt-.e ste'dproc:eeding he=ore the Nap should'inot ha suhject to any such 4
re=zirement>
P g
~*~
pter"d
the Conc;.issxon can investigate and adjust them.
FPA 55 205 and 206.
.hus, 55 205 and 206 are concerned with the implementa 'n of particular rate schedules.
Under these
- sections, the Commission has "simply the power to review rates and contracts made in the first instance by futilities]
and, if they are determined to be unlawfuli to remedy them."
United Gas Pi e Line Co. v. Mobile Gas Service Cor 350 U. S.
- 332, 341 (1956).
The policies prompting a utility to offer a particular
- service, the only issue to which the NRC license conditions
- pertain, do not have any bearing on the above process.
Xndee4i there are separate sections of the Federal Power Act under which the Commission has jurisdiction to examine whether a
particular service should be offered.
Under sections 210-212 of PURPA, 16 U.S.C.
5 82ii-k, for examplei the Com-mission may deteraine whether a wheeling service should be offered.
See Florida Power t Li ht, 660 F.2d at 672 n.15.
Similarly, under 5 202(b) of the Federal Power Acti 16 U.S.C.
5 82ia(b), the Commission miy examine whether I
I*
I ib I
b Power Co. v. Federal Power Commission, 349 F.2d 258 (1st Cir. 1965); Central Vir inia Electric Coo erative Inc-
- v. A alachian Power Coe i Docket No. EL 78-13-000i Xnitial 26/
The Court in Motile actually addressed SS 4 and S oS the Natural Gas act, 15 G.S.C.
SS 717c 4 d, hut these provisions are virtually identical to 55 205 and 206 of the Federal Power Act.
See FPC v. Sierra Pacific Powe CQ ~
>50 U.S.
348, 35~1
,t
'4 I
H 'I
HY r
'1
<<'p t
23 Decision (9/30/83)
~
A central point of the court's decision in Florida Power C Light and the Second Circuit's decision in New York state Electric s Gas,
~su ra, is that the Cosssission
-may not use the filing requirement of 5 205(c> to require a
utility to offer a certain service, for this would circumvent restrictions placed on the Commission by other portions of 27/
the Federal Power Act.
The "practices" required to be filed under 5 205(c) thus are limited to terms or conditions that concern how a rate shcedule will be.implemented, regardless of w~h the rate schedule was offered in the first place.
- Moreover, it followi from the structure of the Act that this distinction applies to schedules for transmission and for wholesale
~2&
service alike.
There is therefore no basis for the Staff's'rgument that the NRC license conditions 'must be filed under 5 205.
~27 The sections on wheeling and wholesale service cited above require the Commission to make certain findings before it can order a particular service to be offered.
28/
The Staff's attempted distinction between transmission and wholesale services is th'erefore invalid.
Staff Motion, pp. 7-8 n.5.
Moreover, the Staff's implication that similar conditions concerning wholesale service would have to be filed under 5 205, id.
has no basis in case law.
The Commission has never sought to expand wholesale power obligations by requiring that a utility's wholesale service policies be filed as "practices; that device has been tried only with regard to trans-mission service.
%hen the commission has required a
utility to undertake additional wholesale power obliga-tions, it has done so only after making the findings prescribed in 5 202(b) of the Federal power Act.
See,.
~e...
New En lanct Power Co.,
~su ra.
0
"~
4n'
f
"<a P
e, g
~
~ ~ <<i&i+
aR 4 lf g*
i~,ufo c
k tA~
~4 ~
P 4
t%
C Y
"~'
I' k
d l
~ pg f
'V Ll
e 24 The Commission cases interpreting "practices" under
$ 205(c) demonstrate the distinction between offering a particular service and implementing one that is inherent in the structure of the Federal Power Act.
With the exception of the Commission decision in Florida Power a Li ht, and the 29/
two Commission decisions that folloved it, the cases uniformly require conditions on service to be filed as "practices" because they affect the implementation of a r'ate schedulei none is concerneci vith the policies prompting 30/
the utility to offer the service.
In Michi an Wisconsin Pi e Line Co., 3i FPC 621 t1965)
F for example, the FPC held that a gas company's lateral line policy vas a "practice" under 5 i(c) of the Natural
+se
~29 The tvo cases are PQcE, discussed in Part B above, and Cleveland Electric Zlluminatin Co.,
11 FERC
%61, n
F e
ommission ordered a utility to file with its transmission tariff a state-ment, consistent vith a statement contained in NRC license conditions, that the utility vould make reasonable provisions for the disclosed requirements of entities requiring vheeling vhen planning its future capacity.
Although the Cosmisslon grounded its action on Florida paver s z.i ht, the oondition that the Connission regurred to be x e can actually be viewed as affecting the implementation of s'ervice under the tariff that vas already on file.
3"./
Even when conditions affecting the implementation of a rate schedule are in question, the Commission vill not automatically require their filing but vill.employ a "rule of reason" to determine whether there will be
~ detriments resulting from requiring the filing which will in effect outweigh any benefit.
Commonwealth 9
lYY~$
~
0
it&
A P
~
i, ~Q ~
p 1t ldll k
0 L'
Gas A". because the policy was "fa] consistent anc predictable cou"se of conduct of the supp 'or that affects its financial relationship.wizn the consumer'nd pertained to the "terms and conditions upon which fthe supplier) would provide service."
34 FPC at 626.
The FPC thus relied on the fact that the lateral line policy affected the way in which the pipeline tariff would be implemented, rather than reflecting factors leading to provision of the service in the first place.
This same distinction is reflected in the FPC's sub-sequent statement on the filing of lateral line policiesp Order No. 328, 36 FPC 77', 775-76 (1966),
on which the decision in Transcontinental Cas Pi e Line Co 36 tPC 1058
<1966), codified on other grounds, 36 ppC 512 (1967), another pas ccnpany case, is in part based.
Zn Transco, the ppC explains its statement of policy in a manner which highlights the distinction between matters affecting the implementation of a service, which are "practices" and so must be filed, and matters leading to the actual provision of a service, which need not be filed:
~ 'La Order No.
328 is not intended to require that a pipeline state the considerations which might lead it voluntarily to provide new or increased service to a customer.
It is rather designed to require a clear and accessible declaration of the criteria by which a pipeline company determines to what extent, if at all, it will participate financially in lateral line construction so as to assure the company's customers of equitable treatmen' In other
- words, we do not intend by formula to
26 take away a pipeline's discretion whether or not to build a lateral, but if it builds a lateral voluntarily or is re-quired to do so by Commission order, it must build or furnish funds for the building of the lateral in order to treat its customers equitably, and the basis for the amount of its construction or furnishing of funds must be set forth plainly in its tariff.
36 FPC at 1065.
.he same principle is reflected in Northern States Power Co.,
18 FERC )63,022 (1982),
a case that the Staff cites in its motion (Staff Motions p. 8).
In that casef an administrative law judge required a utility to include in a filed rate schedule provisions governing the term of the contract and notice required for termination.
The provisions in question concerned the implementation of a particular service that the utility had already undertaken to provide In Cleveland Electric Illuminatin Co.,
23 FERC %6380558 aff'4 33 FERC 861,380 (1983}, also oite4 hy the Staff (Ssaff Motion, p. 8),
a utility proposed to offer short-term and limited-term service in place of certain emergency service
~.
The utility was required to file conditions modifying its 4
short-term and limited-term service in order to render it acceptable as a replacement for the emergency service previously provided.
Thus the CEI case is simply inapposite>
as it involves Commission action on a proposal to modify a service already in place.
In the case at hand, the NRC license conditions reveal policies behind FPL's offer of transmission service
fc k
"ew
'E' P
,. 0 W~'
1 wg ~ax 3
El, g
2
'3 1/
to Se=inolef and nothing mo e.
They have no bearing on how the transm-ssion service will be implemented; this in-formation is already fully delineated in the Transmission Agreement itself.
There is no dispute in this case about what the T ansmission Agreement means.
The issue that Seminole and the Staff seek to litigate is whether clearly understand-8 able provisions limiting FpL's obligation to transmit power should be deleted from the Transmission Agreement because they are alleged to be inconsistent with the Nuclear Regulatory Commission license conditions.
Xn summary, it is plain on the, face of Section 205(c) and from the basic purpose of the I'ederal Power Act that the term practice" refers to information that the Commission and the customer require in order to understand fully how charges vill be determined under a rate schedule.
The term has 6<<
31/
The Staff's argument that the license conditions should be filed because they represent legal obligations of FPLE and not merely internal policies, has a hollo@ ring.
In Florida Power a Li ht, the Commission sought to justify its or er on t e ory that customers should be advis~d of FPL's policies concerning the circumstances in which it will contract to provide transmission service<
an objective that might not be achieved unless internal policies are posted publicly.
See, Florida power 4
\\.6.'B.MK Lz t co. v. FERc, 660 F2d 7(( (St car.
to vacate ense
, Ho. 80-5259 (6th Cir. 8/16/82),
cer~t.
- enieT, D(3 E.Ct.
800 (1983);
see also Brief of FERC a~t 0-215, Florida paver 6 zi ht co. v. FERC, 660 F.2d 668 (Sth Cir. l
).
In the instant caseF w ere license conditions have been widely publishedF the Staff argues that this distincguishes the case from Florida Power 0 Li ht and weighs in favor of the Sta s positron.
The only consistent theme appears to be that transmission service policies should be filed
-and'subjected to regulation by the Commission.
I ~
t I CN
'ht1
+1
&rl&
t
ZE consister. ly been applied in this way by the Commission and the FPC, except for the excursion represented by the 1979 Florida Power 4 Li ht decision and two cases decided in reliance on Florida Power
! Li ht.
The Fifth Circuit has reversed and vacated the orde" in Florida Power t Li ht.
The Commission should heed thc Fifth Circuit's decision and return to the construction of Section 205{c) that it, and its predecessor, followed consistently until 1979.
IV.
JURISDICTION The foregoing argument sets forth, in compliance with Rule 714, the views of FPL on the question raised by the Staff's Notion. If this question is not considered by the Commission>
through certification, but remains before the Presiding Judgei I
the Presiding Judge should deny the Staff's Motion for lack of jurisdiction.
In its order of July 21, 1983 in this proceeding>
the Commission directed that "a public hearing shall, be held concerning the justness and reasonableness of FPL's ratesi
- terms, and conditions of transmission service to Seminole and its members.
24 PERC )61,089 at p. 61,229.
The question of whether the NRC license conditions are "practices" affecting this transmission service and so required to be filed under Sectior. 205{c) of the Federal Power Act is an issue of statutory interpretation distinct from issues concerning the justness and reasonableness of the Transmission Agreemcnt that the Pre-siding Judge has been direc ed to consider.
It therefore is
4
- <<*Pe F.
.+f,l'S
-1p
29 beyond the authority delegated to the Presiding Judge.
Under.he Commission's
- Rules, an administrative law judge is appointed speci'ically to preside over a proceeding set for hearing.
Rules 102(e),,
504.
In this context, the judge takes evidence, ensures that fair procedures are followed, and ultimately issues a decision which vill be reviewed by the Commission.
Rules 504, 708,
- 711, 712.
In the course of such a hearing, therefore, a judge vill issue rulings on procedural matters, evidence and discovery.
Rule 504.
The implication of the rules, however, is that all of the judge' decisions vill pertain to the ultimate purpose of the hearing,
- namely, the rendering of a decision'n the justness and reasonableness of the rates in question.
zndeed~
in P~GaE the main case on ehich the staff relies, the Administrative Lay Judge denied the Staff's motions to compel the filing of SRC license conditions on the ground that the matter eas one for Commission decision.
Pacific GaS a EleCtriC COe P DOCket NOS. E-7796 and E-7777(II) <
Renewal cf Motion to Compel Filing" (12/29/78), at p. ls 32/
Motion to Compel Filing" (8/14/79), at p.
4 n.4.
The Staff subsequently filed its motion eith the commission.
Zn Florida Power a Light, the Staff filed its motion directly with the 32/
Contrary to the Staff's contention, Staff Motion p. 8, footnote 18 in Pacific Gas 4 Electric Co.,
7 FERC 247
- a. f 1 t t.
-P2-.
a -,,
oes no ex
'..e the issue of jurisdiction
1+
8, l.
IV 5
~ a Commission.
Florida Power a Li ht Co., Docket, Nos. ER78-376 and ER78-19 et al., "Staff Counsel's Answer to Petition to Intervene,. Staff Counsel's Motion to Serve and to Consolidate Proceedings, and Staff Counsel's Motion to Compel Filing" (6/6/78).
f The cases. that..the Staff cites in its Notion (p.
8) do not hold otherwise.
Zn both Northern States Power Co.d 18 FERC 5635022 (1982) 5 and Cleveland Electric Z11uminatin r(C'o.,
23 znnc i53,055,-a55 d, 23 r23C-.551-,3so-.(1553),
the 3ndse!,--,.-
ma ~
~
~,
4[I after holding..evidentiary hearings; and aaJ6ng findings <
issued initial."decisions requiring aodifications to the
~
'ate schedules-in-iisue..
Neither cas>> focused on, an issue n
of statutory interpretation, but rather concerned findings.---
made. by a )udge, after. hearings.
Here, in contrait<- the.-
r+
Staff seeks"to* caepei the'. filing ortho Nuclear.legulatto&
Camel.iiion 1 cene
'cond1t5ona ao. that-they.nay heccea the sub) ect of an".,evidentiary hearing.
Zt.hea'r's. emphasis that Northern States and CEZ vere initial:decisions< vhich do not take effect:.until they have been reviewed and approved:
I by the Comaissi,oi;-"-Rules 708, 711,. 712.,There is no such provision for an interlocutory ruling on a motion made prior to hearing.
The Staff's Notion represents an effort to short circuit the procedural framework that assures a filing
~ ~
~ ~
I,
>7,
'la
~ pre cf a
utility the opportunity for Commission action before a
filed rate schedule, can be modified.
Since the license conditions that would be filed are not related specificallY to the Transmission Agreement, but are of general 'appli-s cability> they could affect other. proceedings:.that may be instituted befor~ the Commission.
The Motion should be denied for lack of. Jurisdiction, and the Staff. should be
~ A' required to seek the relief that.it desires.directly from=-
s the. Commission Sole w e~~
> 'Ie~ +
hOAtt
~ wv~
A
~
~
~ )
Ve '.:-'OHCLUSZOf-'-.-~--~~~....'.: <<..
... The'Staff.offers no'compelling reason for..ita request 4~~+0 ~
4
~,
~
thit tPX'be x'equirqd tqf le NRC:license conditions with;the I
o si cn nnder j 205 cf of the,'Federal Poser.act.:
Zn f.acti.
1&
tP demonatra a-po cy,considerations:
we h: strongl V
agai'nat.dciqGii g.auc a-ing.;
Nor do the-staff-'a arguments
'IW4A4ae res
~ vie'C
~ ~
ves have legal"meiit -"ance--
e-Staff~in making=these. arguments t
" miaappl es proc
- and.
areada Section 205(c).,'-.of the
=.-,.'.
Federal Power Act.~'The-statute
. the applicable~case law and consideratione.of coaiity'and adninistrative efficiency all require that the Staff'a Motion be denied.
Respectfu y submittedf A. Bouknight, Jr.
arold F. R~is illE. Grart V
~v Lowenstein,
- Newman, Reis 0 Axelrad, P.C.
1025 Connecticut Ave., N.W.
Washington, D.C.
20036
~I Attorneys for Florida Power a Light Company e
II I
Ef1 r
C'4+
W)
~
< Wac
~
~ s C
2 "I
'cp.
CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service liat coepiled by the Secretary in this
- psooeeding.
Dated at Washington, D.C.,'his 7th day of Novenhes, 1983 ~
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APPENDIX A ANTITauSV CpeITIOMS.
LICENSE X1. eF-is.
N3R g
~
~
The Florfda condf tfons
'4V J ~
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X.
J J 4%
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- 3 ar 4 Lfght Culpa~ shall coeply ~th the follfng antfb I
OKFINITINS~.'
.e (a)
Applfcibli aria', mans the area ~
t A=an4'any other. area=.5I Qe-."state of 4+~+.'+5cbgI th.future "~Cop+>ll.-gga-
- <<ge~ratfo;traON fssfe -4,45s~tf~,e<.el~~~gac+
poles':.'m4eip ver,:.Og'.aI~>a-+,l<+t >
4~-.h
'5 4 4-Hthfl-iykdelf~tL~ana -sol I
Qsepo
@slee-5Hs-m ~e~lfl 5at rest.orL7 5I a Iene t)nS-'faell50>> ocate4>5 such=
J
(>> --.~.~>~mans no~e-i~ a.<<,ht-C~~~=---
- '~+l~ceo%$
4 cotporatf one-.g,'Qpassf ~~yf the
'y o
~ ~ ~
f )+I I..lg>! or, corpora..
ask n of.ay Ogfopemi~fac5l 5t5 5'~e.
ss oa o%i cf~~05 a ~e
- <llew.
Kte a
(~)'-5to-.its:or proposej.-
facf1(tLes.area 45$~1y;fntercowcte4
~technfeil)y =
feasfb1e:-ot'fri tfon-:sHQhQse,ot'the,Company; (2hfti.afstfng or~yropose4 facflftfei-'are'fully or
---.pagilst~uftbf.
tbe',ipplfcabla:irbF-",.l3)=.ftfs, or opia ameaaeeestfof.'operatfeas."sflI be tubfulsto rofulatfon,=as a, pub! fo utf1ftr.uftb.raspest to rates or servfee.under 'applfcable state.inc, or under the feearal poiiar aet,"or ft fs lefalfp sseeptse fry suet 4
~
regulatfon by lax..'4)
'Nefghborfng 45str fbutfon systea'cans a prfvate or publ fc corporatfon governnental agency or authorf, fsunfcfpalf, rural electr5c cooperatfve, or la~1 assocfatfon of any of the foregofng, Afch engages or
,fn good fafth proposes to engage fn the dfstrfbutfon
~
'of electrfc~energy at.: retafl, whose exfstfng or propose tff.gf
~pl f 4$ 'Q.'
--8
~j" P~>glib" QPQ r4")gal 5t'~l9 3a'~-'
if Yt,
~h
~
~ 2 3I
~
we r a,
- c
~ 'ahab.
~ ~ t' '
C.~
~'
P facfJftfes are connected or taehnfcally feasfhle of conneetfyn Hth those of the Cma~,
and Nfch aeets-each of the crftarfa nMNbered (2) and t3) fn yaraNrW le)
'Costs'eaae all approprfate costs.
fnclndfnN a reasonable nba'om fnvestaent, whfch are.reasonably
. allocable.to,an.arrancewant heheea,bo or.ere el'...
systo."eat"..coorOaatf on yrfnefples or amorally" accepted: fahstry.'ynctfcas..-'n detamfninj.costs, ~
value. shall he fncleded for loss of'evanuas fma a sale &yorer.hy one ya~ to a con!nor Afch another yarner afoht othae5se serve (5).. The.cf tfis.et Cafssarflte;=. Coy; Ifeat, Cictaosrf lie 0
.." Crace.core:Cycfsls",'.clesfstos..tats Nelisg0iliii4a-:.
~ Moore.'jivea.an<.che Fernand na'1~0 fyfsfafofaOi da j'OtfglfeI,
-,are'eaesf tothi
--:.-;-;.aef
. II;,entfties;e~f rf~=.4fs htfon
- 'gare
.~Ot~yifryositofk
" -lf on tegrgpgHeCfii~~"51'~faef)f e ar!.tR
'-; feasfhli,ecfi.ntareoineetfoifQ Oi C~e Tbfs185W
~ -
--.- yrovfsfon',crates syaef tfc eaceytfons
~~.-,afsaiCI thf ay/IfcahllVrfa, I
fhJ@the'area'.afsFs"cs Atta Aroi -" -
.'sot'-.I s 4:ho i?
': 1 RCOIOtE NS 1
~ a ~
=.-==Is)-..lhs-.c:shall fstercossect.at.asy tec Ir.==.
.:-.:- feaafhlirysfst; os-..5 to:. systesrase oyersti'. fiyaral~lil;.'=
aattI.'a:ieittan a
t Hih..my:IefIhhorfnN-~~'~
. -'.entf/reqeestfno smch ntarconneetfon -; A=.==.., ',.
-:.th)--. To:6e. extant" 5t 5s'iehnfeally, Aasfhle;. fntarconneaSns
=-
shall'not'he lfetted to leer. voltages ~n hfghar voltas are requested and avaflahle and shall not he lfaltad to hfghar voltaoes Mn lofer voltigas are mpasted and avaflahle.
Voltages 'avafladle'eans oxistfnN oa the Coca~'s systea at the desfred pofnt ot fntarconnaetfon.
Coeyaay say fnclude fa fts rate sctsOle provfs5ons for convarsfon of fntereonneetfon voltage and ralocatfon of fnterconnaetfon yofnts to aceamoda&
load Srarth and desfon changes consfstent eath contfnoanN devalopeent of Coepany's tranmfssfon System.
(e) lntarconneetfon agrseaincs shall.yrov54e for the naeeoa&
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.eadure@'end control >equfpIfent as nqufred for i an4,prudeot~opara".5 on of the fntarconnerad
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ON-CcN~;, or. {3)g'nefgborfnI entfty eMck, oL'Janus%" ie.'-. 1$7$;,'ce ot controls. electrfc'acflftfes'Qth'.elf nal 'a/acf fn excess.of:5NSe, Orovf4e4 Chat.thfs flea (4s {3) shall not tel5eve the CoeIpee fern. the;-altarnatf oblf~atfon, provfde43I"paraSraoh.{bj;,to eke"sales=to=- - 'ntf Q.,er. Ie~ghbortoy~<Ostrfbutfon. jysiea failfem,of. aalu su% sales: Nrectly)to~,the elfbfile.:eefghSoRnI'.en' '-'=. {e) Noles~eTe.~r Ialeg.am'remen shall not
- Is or resale.;ef. ~g,'ioI4!pursuant'.Oi~sach'a nts as.f ht':wisargtof Cec@Oe<rel<iL
(~of:C 0'sta@50el fvey'.-pofgt %ACaoes"sha11 /be.os' she4 consfstentHCh'Che. fsfons of~f lI.(h)~" ~ ~ g fir~ -- -..-qX~TRANSN$$. j4 9@~ I %o~kD-'-'-..., . (-) sources an4 AQ QlmgOlt g%t' = . =:.:---.'-=-'. be@meOe.:4~ <Ch ikon +So entft)e, e:. ..-::-:-=. ~$i:fsti li)iiebieea iiiy-saIWsrf ~ntl~vlQ ahagiiiifer~fm tbi3fatei t QwntE connecte4 an4 one ¹~re nefghborfII '4fs on ms%gl ...:,.::..--.. Qth.~.: neo or.fiMM:future--5t3a~coaeeefad~{A;be - any m5Ihborfay Qtfor nefjhborfnI'4fstrfbutfon PsQiA) an4 ~ other electrfe.atflf.outs54e the apllfcable aree,':- an4 (ST frNI uy qsalftyfnm cogeneratfon facflftF or.s r pro4uctfon facf'lf~ {as 4effne4 by Che federal:En'~y ~ eSulatory Ceef ssfon 'fn 1! CFR tart 292, Subpart I) HN ~hfch Culpa~ fs fnterconnected to a nef Nhborfno entf Cy=.w nefghborfn9 Nstrfhutfon syscea, ~te both Che neer of Oe %valffyfnN cogeneratfoa facflfty an4 Che nefghborfno entpt or nefghborfnI 4fstrfbutfon sysCee to &feh such CraloafssAN servfce 5s provfete amtee Chat such nefghborfnN entf+ or. nef Shboriny 45strfhutfon System All aake. 4urfn9 Che tfm an4 Co Che extent of 5ts purchases,~f~ Che cooeneratfon';. ~ facflf~, ~ sales of 'backup petit,"an4 'aefntenance '.pciar" (as Chase'Ceres are deffaelfn<api)feeble,federal, Knot 1eyulatory Chief ssfon tegulatfons), j+ Che, qualf>fyfna <<oSeneratfon fief1fCy or sma11 iioier productfon',fecal 5 tjrg provf4ed liovever ghat nothfny fn,tPifs ffeII fS).shall mfa th 4 N 2r. 4 '\\ C hs:cp~h ~ 5 ~ ~ ~A ~ ~ ~~>~&~rt4.r LP ~ ~~ ~%a C~'+ s +15<<tfons und<< ~tfon IX haraof. Coepa shall pror5ae trannlss5on service eager this paragrspPI. on1y ff (l) Company's an4 other connected transadssfon lfnes fora a eontfnuous a1actrfe path be@seen. the supplyfeo and tha recfpfant ~stans; (2) perafssfon to itflfte other systems'rans@5 ssfon lfnes can bo obtafnad by the propoaant of the arrangeaent; {3) the sarvfcas can reasonably bo. accommodated.. ftea i'acjLnfcal staadpofat Hthout s5gnf rfcaa>;, Jaopardfafae Cori~,'s.relfabflf-w+fte. ogjtransefssfo4~ facf1 5tfos:,(ig~asonai1a.advance.repast tf afva4:Am - > tha nefghborfny,aitfg ar nefghborfng 4fstrfhtfon sysCee 'eA,fnj such.sarvfcas to the extant Oat suctyotfce fs roqufrt4 for'ratfne.or plannfne purposasI~provf404 ClNR~ Comp~.4fstrf 'a rattan tfjatlh)0 sattfM~~~~f reasonable performs:ef;tfIe Qthfa ihfch.co&'abanco;notfoa. aust be-racaf4E~transIafssfen.~eaa" oveaafstfne payat'acflitfesuan4,($ ).a-reasonable.-iayiitude, tfae duration.fIeI+ ~transactfons 5s spocfffi4 y o 'to the . comoncaIewt ef Oe:traasalssfon~- -. (b) CoEyary~s yeegsf 5 of='transwf ssfon:s~a r Ws -'astles shalRIifena hisls".nhlchf a. +5fs cestsgsf.transwfss5onrrsasonahlp sll" li. ce 5e,accorgana~I a transnlsslon agre~en ss ...tarfff ad a t fete)i 5ts'sueas aha requestfnj.eat hei . sarvfeasgeg to jmvf >Inde OH o~n-shil.i+epos of<such.eatf f 1 "csarvf eo Fuckral'Ciie or 5ts,ihcceaso,pror5gfng::fe".aoahf f@@No 1~.thfs~l5cens constroeg:to":rteeaoefrafC+panf to. nhee1 ponir'ang energf 'to or fryi reaaf1.'costiner. ..':=-"- '-. 5cl Cmoanr shall-.heep.resonating nelghhorlng en t5es=: and nefghborfng;4fitrfbutfon systaILs fnfqraH of fts trm-etssfon plannf ng:in4 constr'uctf on prograas e4 shall fnclEde--.:-. tharafn sofffcfant:transafssfon capac5 as requfred by <<ch-- antf tfos provf4a4 that such antftfes prov54e.'tho Company 'ut15cfant advance Iotfce of thafr raqufreaonts an4 conosct fn a tfaely aannar-to rIfwburse the Company fot'osts, as allied by tho ro9Ilatory agency havfng 4urfs4fctfon, approprfately ettrfbutable to coaplfanca Htb the roquest. Me+var, Coapany-shall not be roqufred'o construct any transII<ssfon facflf '(l) Nfch All io of no 4caonstrab& prasant or future alecMcal banafft to Company, unloss OI Ac515+ cannot reasonably bo constructa4 by, No roquas&g antfty so1t1y by reason of tho Company's unr'aasonable ',basal to grant an easeaent or.lfcanso, or retusal jCo coopara>",-fn 8 l F' ~ >~(
- 0 I
f 16 e 3 pomr supply po15efes herefn, are to be sub¹fttid by ',th. Cweety ee tee regu1eee~ egeecy'heelers eHedfee1eet@gto'f~ ts to the sftfa0 of any such traas¹fgyon facial)>, t2} &)ch mould )eopardkse Ccapatty's abflfty % finance or consmet, on reasonable tares, facflftfes to <<cet its em Int1cfpated systes rtqufre<<eats or satisfy exfsda9 contractual oblf9atfons to other e1ectrfc syss, or t3) vhfch coul4 reasonably be eonstructad by the requestfn9 entf Qthout duol fcatft4 any poitfon of Co<<paly's transafssfon sysiaa. )n such cases ~re. Coepany e1ects not io construct transelssfm facflftfes, the requestfn9 sys shall have the optfon of coastructfny ano eefn9 such facflftfes and fntarcoeectft @II ef th Ca<<pany's facflttfes. For the aurposes of saetfon X, upy adfa9 present traasafss on facflftfes shall be consfdare4 always to hare use 4aaestrable preen4-ar future elactrfcal beneA,t to Cpa~. td) IoMths~dfnN,Oe fore9ofn9, Capany shall aot 4eclfia = to coo~erato fn trans¹fttfn9 yevet Iroduca4 fm ay aA80C antf,s tfncludfni Ati's) or nefgh0orfn9.0strfbutfee== sta<<'s oeershfp sharI, or the aeenhfp shart of.ey Elhi t orfda alactrfc otflf for ehfN Cmyoy'I transifssf systa¹ fs necassa~ ia 4elfvar such year iaaf Ie Alifato-Vagtle Xuelair rafts froa a NfNC e'ofnti ef fntarcoeae. c beueen Ce¹pany an4 Oeorgfa feet.Coapa~.io yefnts of descrfbeC 1n la) lereof beOees Coipey'ai4.eOeg IMlfckei Ws condf tfon.shall mt. be.consirie4 to;reqefre CWme construct tranialssfoe=facf1 5tfea3rfNn=Oe.State ef: %%5 CNIyuy shall-not. be yreclu4e4. Aim-reqofrfsy such a~eiQNrf entftfes.: aef ghborfnI Lfstrfbutfi-'aCes an4 ether eNtf io aakt reasonable ffaancfal arr nts io ~ for the constructfon of-thou portfons of-ac)lfifes io be, Itf'le@= by ca and ehfeh are constructi4 for Rfs purpose. X! ACCESS TO 'POOLIMS ANNCBCNTS 'eapany shall sponsor the ¹eebirshfp of any nef9hborfno en~ fn aay pool fn9 arrangement io ehfch Co<<pany fs presantly a party or to fch, durfn9 the tet% of fs
- lfcense, C4apaW beeves a party; provided, heaver, Oat the nefghborfa9'nt$
ty sat)sties eeabershfp qualf ffcatfons Nfeh are reasonabIe and aot unduly dfscrf¹fnatory. To the extant thi: Cceplay enters fnto poolfa9 arran'%Oats dur)n9 the tars of 4e lfeease, ft shall use 1 ts best efforts to fnclude provfifonc therefn Afch peraf t reguestfn9 nefghborfn9 entftfes the opportun) to partfcfpata fn the arranieent on a basks that $ $. rea50hibIe aad not unduly dfscrf¹fnatory. X?1 JURISDICTION OF OTHER REGULATORY ASEMCIE> Rate schedu1e and agreeaeats, as requfred to proeyfde(fox..:the facflfVet and arran eneats needed to 1 le<<ent""th bu RETURN ON E U!TY WHOLESALE RE ulREMENTS SERVlCE under the existing accepted method of cost allocation the high load factor user gets allocated more cost than the low toad factor users (12 month coincident peak method). This method of allocation of cost has a tendency to send the wrong price signal to the users. Additionally, FPL has the obligation to meet the capacity requirement for this low load factor user the same as the high load factor user'but receives less revenues as a resuit ofthe way the service is utilized., An example would be to compare Seminole Electric Cooperative with a total PR peak requirement in 1988 of 239 MW,total revenues of $9,410,846, load factor of 0.49% ~ ~ ~ ~ . and ROE of 13.12%%d to Florida Keys Electric Cooperative with PR peak dern'and requirement in 1988 of 81 MW, total revenues of $23,118,293, load factor of 62.64~%%d and ROE of 19.52~%%d. 4'y TRANSMlSSlON SERVlCE FPL currently uses a average embedded cost methodology to allocate its transmission system. This method does not send the appropriate price signals to the other wholesale users of the service because FPL's retail customers are subsidizing the cost to those wholesale users. Even though the ROE which was calculated at 19.56%%d for 1988 would seem to be a reasonable return, it does not truly reflect the cost and value of the service being provided. The main reason is this service is presently priced as a component of bundled requirements service and additionally does not reflect the attending generation cost of providing the service (ie. economic dispatch, lost opportunities, etc.). Moreover, additional transmission facilities must be built at marginal cost to provide firmservice over long periods. t 5P'/037' IIJ ih coaf loEMTlAL icussloa pLNposgs oaLV h florida Poser 4 Light Coepany Coepariaon ot Ratea ot Necurn 4 Return on tqulty gaae4 on fERc ccethodoiogy lscateaent RK forlat) 1944 Actual Qna(tjuated faa Savinga filing Oace (000) I Rate Claaa (2) C3) Naae X lolo Revccaea Contrlb Naae CA) <5) (6) C7) X Total Return X Nate of contrib Earns lgol) concrlb Return (4) Return On Equity aeeaaa4~ ee~ a ~ aa a a w a +ca full Requireoenta Scaino le ARPRSA lransaiaa ion'ervice 56,33$
- 4. NX
$10,191 7.4$ X $9,206 17.29X $23,246 17.03X 516,414 30.43X $56,364 39.75X Partial R0QLliteoenta $23,292 43.'FCX $44,919 3$.77X $6,912 37.AX $ 1 ~ 11$
- 6. I2X
$2,592 N.23X $7,600 61.71 X 16.13X 10.94X 'll 13X . 13.94X 19.90X 12.69X 13.12X 19.56X local FERC $$3,2$ ) 100.00X $136,764 100.00X 514,219 'l00.00X 14.07X ty (w ~ r, II p~ C I Cf +Yf tl 0 CORf IDKRIIAL ~ IOR 0 IS CIISS ION PuRPOSKS ONL7 .oride Pouer 5 Light Cee~ Ceaptls401 ot Rates of RetiÃfl 5 Return on Kquity by fKRC Point of Delivery Kstlmted fKRC Point of Delivery Data baaed on IKRC Hethodoloby (Statement SK Format) 1955 Retuel unadjusted Tea sevinbe f ILInQ Data (DDD) ee ef~e~e ~ ~ aa ~ eaae g I ~: I '..'- -"t"'l:r'g ~ l ~ +>> Va Ville Point of Delivery (1) (2) (3) (4) (5) (6) Dese X, Rate X total Return X Rev<<wee Contrlb aese Contrlb Kerned (ROI) ContrIb eaaeeaeea eaaaa (7) ~ Rate of Return (5) Return On Kqulty Partial Requlreeanta aeaaeaeeaeeeeaaeeaeea NtN Slyrne beech florida Reys Kleo Co'ap City ef ft.~ 'Ieree City of a~teed City of Vere leech City of Ste*e'ake uoc'th utllltiee creen Cove Spr(ngs (rma) Jeeksonvl II~ beech (fNPA) Subtotal Partial Requlreeenta $1,977 $13,449 $1,159 $695 $951 $ 198 $55 575$ 55,959 SZ3,29I 8.49X f7e7CX felOX 2e95X 4,05X 0.85 X 0.3dX 3.25X 17.13X 100 OOX $4,120 SZ7,dd7 $2,597 $1,338 t2,055 SCSS $ 172 t1,737 $5,562 $49,013 8,42X fd,56X 5.31X 2.74X 4.26X 0.59X 0.35X 3,55X 1S 1ZX 100e19X tf56 $3,$63 $375 $239 SZ91 $53 $27 $227 $'1,255 $6,559 5+DCX 55.58X 5 43X Se46X 4+ZOX 0.77X 0,39X 3.28X lb.2OX 99.67X lS.CDX'345X ICA4X 17ASX 13,9CX 12.3DX 15,$ 1X 13,05 X IC+ZDX lb.06X 15,4&X 19ofZX ZOedlX 2$.39X 19.47X lb.7dX 23.71X 17.46X 20,06X 19.75 X .encl(let(on of Load Data to i Sevlnbt fi(InD tote( Partial Requlreeenta $1 O.OOX ($9C).0.19X SZSt292 1CO OOX $48t919 'IDO OOX O.SSX $6~912 100.00X IC,ISX 19.90X full Requlreeents eace ea e a ace a ae ae a ace a Johnson CKC t7 brlbhton CKC t 4 Arcadia PRC I7 ft Vlnder PRC tZ Subtotal Seelnol ~ Dlstrlbutlon $452 32.90X $641 C3.75X $129 . $.51X t213 14.54X $ 'I,C65 33,79X t1,216 35.6ZX $1,374 40.Z5X SZ98 8.7ZX t526 lfi41X SS,C15 33.51X $112 29.45X $185 48A8X $34 8.8ZX $50 13.22X SSS1 SC.ZIX 9.24X
- 13. 46X 11.30X 9.fSX 11.17X 5.54X 15.39X 13.5 OX 9.61X
'IS.ZDX Sd, IIO 59 AX Sub(ate( full Requ(reaenta-Reeonellletlon of Load Data to Iaa Savlnbs fillnb $4,335 100.00X $9, 525 93.46X $0 O,OOX $666 6.5CX total fuLL Requireaenta $4,335 100 OOX $10,191 IOO+OOX City of C(eulston (fransalaa(on) $2,570 66.21X $825 73e99X $1,206 108.20X ($91) 5e20X $1,115 100.00X 13.50X 12.d7X '10.94X lb.C5X 16.60X 12.69X fetal Seelno(e RKPRSR ~lesion Service t9,206 t'16,418 $23,256 t54,368 $2,592 $7,600 11 '13X 13 9SX 13.1ZX 19.56X otal fKRC $53,251 $136,764 $18,219 13.32X 18.07X t I 'I I 'I > w ef 'r 1 THE STAKEHQLDERS VIHOLESALERE UIREMENTS SERVICE ~ ~ ri ~ ~ ~ ~ r t ~ ~ Requirements Service results in an insurance policy for capacity at average embedded cost forthe user FPL is leftwith the obligation to provide service with littlenotice at average embedded cost. Competitors o Other suppliers of electric service see benefit in selling long term capacity and energy to the wholesale users. FPL's strategy is to offer a long-term contract for capacity in lieu of requirements service thus mitigating its obligation to serve under the Tariffand managing sales pursuant to contractual provisions. FERC ~ FERC objective is to protect the users of requirements service and provide them access to capacity. ~ FPL wiilretain the obligation to serve. TRANSMISSION SERVICE ~ Users of FPL's transmission system desire open access with the same rights as FPL 524O.) v lt f I l 'f ~ ~ ~ P ~ ~ ~ ~, 's:Jul ~ ~ ~ ~ ~ e +v l ~ls e Users are not ~illingto share in the operational costs of providing the service. o Users want ownership rights of the transmission system at average embedded cost price. Competitors Other suppliers can build a single transmission line in FPL's area for minimal cost to avoid paying FPL fortransmission service. FPL would be the back-up or the reliability for the service without compensation. ~ Other utilities could enter into new arrangements (FMPA pool arrangement) which result in circumventing our transmission service practices (i.e. source - destination, quantity and duration) FERC FPSC ~ FERC's agenda perceives the transmission system as a bottleneck to the competitive market and is activeiy encouranging open access. FERC indicates a willingness to accept creative pricing for access. ~ She FPSC is interested in statewide planning for transmission and the efficient use oftransmission facilities. 'I l INTERCHANGE Users ~ Some utilities (users) are leaning on other utilities and are misusing the service to their own advantage. Competitors ~ Some utilities are leveraging themselves and offering firm sales of capacity and energy to others while depending on interchange service to back-up these sales. FKRC Increased competition in the wholesale power market is not consistent with the origin'al objective and the existing terms and conditions for interchange service. FPSC ~ FPSC objective is to encourage reserve sharing and pooling of resources with the overall objective of maximizing the generating efficiency in the State of Florida. 7 4 l,>> a P I INTERRELATIONSHIPS WHOLESALEPOWER MARKET RECOMMENDATIONS NHOI.E SALE FERC ELECTRIC TARIFF ~ PROPOSED CONTRACT RATE SERVICE TRANSMISSION CSl hy RETAIL ~ TRANSMISSION SERVICE ARRANGEMENTS ~ INTERCHANGE/INTERCONNECTED - OPERATIONS f I CI ~ INTERCHANGE COORDINATION II I Wc RECOMIVIENDATIONS WHOLESALE RE UIREMENTSALES ~ Rewrite terms and conditions ofexisting FERC Electric Tariff. Notice provisions which require users to plan better and allow FPL ample time to construct generation (i.e. long notice to commence service). Notice provision which mitigate effects of "stranded" investment (i.e. longer notice to terminate service) Terms and conditions should be clarified to address responsibility for cost of construction of new facilities. ~ Existing pricing structure of the Tariffshould be modified to reflect cost of providing service for on-peak and off-peak periods. CONTRACT RATE ~ Investigate the development of a "competitive" long-term service contract rate. Evaluate market dearing price; ability of FPL to compete; , evaluate expected value of retaining sales and increasing sales. TRANSMISSION SERVICE 1. FPL should become pro-active in the transmission debate. ~ FPL needs to attend industry meetings addressing transmission issues. ~ FPL needs to open a dialogue with the FERC regarding transmission issues. QQQQ gg ~ W ~ 'I C %a, ~ ~ ~ ~ ~ 'W K"~:':"r' ~"-""-' ~ 1 C c' 0' f 2. FPL needs to visit corporate practices regarding transmission service at FPL (; recagnitian that there is a need to change current philosophy and dedicate the proper resources to do it) 3. The existing transmission service study needs to be reactivated. ~ The study should be split into two phases. a) Phase I - Short-Term Transmission Service. Short-term services are less complex and appear to be much easier to develop methodologies that the group can agree and act on. ir) Phase II - Long-Term Transmission Services. Lang-term services are s more complex, potentially more critical to FPl. arid as such should be studied in greater detail separately. INTERCHANGE Revise all interchange Agreements to better reflect the evolution in the industry to a more competitive environment. Change the terms and conditions of emergency service that currently allow other utilities to "lean " on FPL (i.e. TEC). Change'he terms and conditions of short-term capacity and energy service to allow more pricing flexibilityand compensatory rates. Change the terms and conditions of economy energy service to allow FPL mare flexibilityin a competitive environment. ) 2, 'Oevelop a short-term maiket plan. Allow FPL to price short-term sales at a market price during time it has excess capacity. 524Qgy ~ l l II "4Y~ s l~ ' VIEW OF THE REPOSITIONED WHOLESALE MARKET In general, the repositioned wholesale market (while not perfect) could result in a more equitable and compensatory arrangement between FPL and its competitor utilities. FPL would be provided with the tools to better manage the direction of changes which may affect us. It should be noted that FPL will be forced to respond to changes in'his marketplace in any event. Specific proposals; requests for service which have been received; and actions by our competitors mandate action and decisions. In our view the recommendations and action plan will result in the following. INTERCHANGE Emergency service would be provided for "real" emergencies. ~ For instances where utilities should have:
- 1) bought capacity; or 2) built capacity, more equitable charges would be levied.
~ Incentives created for building Operating Reserves (i.e. Peaking Capacity) ~ More interchange power reciprocity among utilities. GZ< U.gg p'j '4 4, ~ Buyer's who purchased lower quality service from others would more appropriately compensate FPL for reliability when lower quality service not available. ~ Under Short-Term Power Agreement, as market dictates FPL could make sales to benefit stockholder/customer. TRANSMISSION SERVICE ~ Provide efficient price signal to the generation supplier and the purchaser. Transmission Service pricing would result in decisions being made by others on a basis similar to FPL's decision-making process regarding planning and operation of transmission. (i.e. What are the real costs associated with siting generation removed from the load to be served' Provide incentives to transmission owners to wheel (more compensatory rates). ~ Provide more incentive for FPL to build transmission when demand exceeds supply (more closely approach the value of service provided and the cost of marginal construction). ~ Achieve equity between native load and wheeling customers (less cross-subsidy between native load customers and wheeling custqmers). /PE Q.g g ga ~ ~ a ,V q V 4.) hi( )0 < 0. %f .;S CONTRACT RATE Optimize revenues produced from generation resources (i.e. high load factor service; FPL selling base load capacity. . ~ Assurance to the purchaser (through formulary rate) as to basis for pricing. ~ Allow FPL to better plan; more assurance of MW to be served as wholesale. By offering an alternative to the service under the Tariff, utilities have less vested interest in opposing changes to the Tariff; mitigates FERC opposition to Tariff changes because access to base load capacity is still being provided. ~ Provides mechanism to retain "best" customers. Helps FPL position as a "seller" rather than a transmitter of power. WHOLESALE RE UIREMENTS SERVlCE ~ Better notice provisions would mitigate the problem of the prodigal son. For those systems that had not planned well, FERC may be persuaded that marginal cost is appropriate. h \\ ~ ~ ~ ', ~ ~ ~ ~ ~ Overall improvement in terms and conditions in the Tariff as to whom is responsible for the cost of construction of new facilities would reduce FPL's construction cost exposure. ~ New "time of use" rate design would encourage off-peak usage and encourage users which only have on-peak usage to construct peaking generation. ) ,i. I F,, ~.0, ~ ')- - nL-18 llli~ 44 ~ I ~ <<a ~ v ~ ~ ~ I ~ ew IV 0l '~c > I "u-1 <w ~ x WHOLESALEACTION PLAN INTERCHANGE II ~ Revise all interchange Agreements to be completed by April 1990. ~ File Revised interchange Agreements with FERC by the date to be determined by FPL's executive management. o Develop short-term market agreement. Allow FPL to quickly provide short-term capacity at market base prices during times FPL has excess capacity. CONTRACT RATE ~ lf investigation determines FPL can compete in this market, develop a long term, contract rate for use in the wholesale market to be completed by March 1990. ~ Get approval from FPL's executive management to offer contract rate to wholesale market by April 1990. ~ Negotiate with potential u ers. Execute agreement and filewith FERC, as necessary. WHOLESALE RE UIREMENTS SERYlCE Rewrite terms and conditions of FERC Electric Tariff(i.e. notice provisions, cost of construction of new facilities, pricing structure) to be completed i .. by june 1990. ~ ~ 5>)or-~ ~' Exhibit D xi PV 4 g' 1 IS*4I%~ h M$ State of Florida ) ) County of Dade ) FOURTH AFFIDAVIT OF WILLIAMC. LOCKE, JR. P R T 8 I, William C. Locke, Jr., having been duly sworn according to law, state that the'ollowing facts provided under oath are true and correct to the best of my knowledge and information. 1. I am currently the Manager of Inter-Utility Markets of the Bulk Power Markets Department at Florida Power & Light Company ("FPL"). I am the same William C. Locke, Jr. who filed an Affidavit in this proceeding on May 18, 1992 (filed with FPL's Memorandum of Law in Response to Florida Municipal Power Agency's ("FMPA") Motion for Partial Summary Judgment). Xy qualifications and background are listed in paragraphs 1-3 of that Affidavit. 2. The purpose of this Fourth Affidavit is to explain the commercial and competitive sensitivity of certain documents, obtained by FMPA through discovery, which FPL requests the Court to place under seal. 3.. The electric utility industry has been evolving significantly over the past five to ten years, as recently evidenced by the Energy Policy Act of 1992. The change in the electric utility industry has resulted in much more intense competition among companies and in increasingly difficult contract negotiations in the wholesale power market. FPL has performed detailed studies and analyses over the past five L'C t I ~V f years to determine how to best position itself for the future. These studies reflect an acknowledgement by FPL that the electric utility world has changed and is continuing to change. The documents at issue, and the candid strategic business plans contained within them, are the result of FPL's efforts to prepare for the future of the electric utility industry. 4. FPL competes with other Florida utilities, including FMPA, to provide wholesale market services. The documents at issue reveal FPL's forecasts,
- plans, and strategies regarding competitive activities.
Specific contract offers to competitors are discussed in some documents while, in others, FPL's strengths and weaknesses in wholesale activities are candidly evaluated. The documents detail items such as projected industry trends, business forecasts, FPL self-assessments, and strategic planning designed to meet the future evolution of the industry. The information contained in the documents evaluates the current and future business environment of the electric utility industry, identifies factors required for future competitive success, evaluates FPL'.s strengths and weaknesses in-light of those factors, and discloses strategic planning initiatives to counter identified weaknesses. (For mcample, see Bates Nos.
- 037004, 160600-
- 160633, 523388-523420, and 524153-524178) 5.
The documents also outline FPL's competitive analyses of the strategic interrelationship between wholesale )M 4 4 '\\tgI ~ 4h
- sales, transmission, and interchange services and disclose FPL~s marketing and pricing strategies for these services.
(For example, see Bates Nos. 523388-523420 and 524153-524178). 6. Zn addition, the documents reveal sales,
- revenue, peak requirements, and load profile data for particular FPL customers, along with FPL's projections for future sales,
- revenue, income, new accounts, and capital expenditures.
(For example, see Bates Nos. 037006 and 523388-523420). 7. The documents also disclose FPL's analyses of potential industry competition, new. sales opportunities, and courses of action for new wholesale market service relationships. (For exangle, see Bates Nos. 523388-523420 and 524153-524178) 8. A competitor in possession of these documents could gain an unfair advantage against FPL in the wholesale market and in future negotiations with FPL. FPL regards these documents as highly sensitive, as evidenced by FPL's internal treatment of them. As I explained in my January 13, 1993 Affidavit, FPL created a separate filing system for strategic planning documents, including the ones I gust described. FPL recognizee the extremely sensitive nature of these materials and thus maintains tight control over this information, even within FPL, in order to limit dissemination within the
- company,
"4 J'g a V'. 4l 0 9. The commercially sensitive nature of these materials becomes even more apparent when they are looked at collectively. These documents, viewed as a whole, present a clear blueprint of FPL's existing and future competitive plans. As such, FPL understandably regards this information as valuable and sensitive. This infozmation has been disclosed to outside entities only due to the present litigation. FPL's competitors could use this information to their advantage in future negotiations and with respect to their own strategic planning. As Manager of the Inter-Utility Markets group of the Bulk Power Maz'kets Department, and as a negotiator of many FPL contz'acts, I strongly feel that these documents should not be placed in the public domain. [The next page is the signature page.] 4 iver Wkly Authorized Agen r Horida Power 'ght Company STATE OF FLORIDA ) COUNTY OF DADE S/S I HEREBY CERTIFY that on this 3rd day of June, 1993, before me, an officer duly authorized in the State and County aforesaid to take acknowledgements, personally apped W. C. Locke, Jr., who produced the following~ identi6cation, Horida Drivers License, Number L200-923Q7-326 and he acknowledged before me that he executed the same as his free act and deed and who did take an oath. In witness whereof, I have hereunto set my hand and seal in the State and County aforesaid as of this 3rd day of June, 1993. Notary State of Florida Commission or Serial No. ccll7934 My Commisiion Expires: BOFARYPUKIC~iATECX'K~~~~:~L HVCCWCVQMOH D:=ZR'.~'.~r.'~ eussy r~ c-mc'=i:w. Exhibit E r tr ~r 't UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION FLORIDA MUNICIPAL POWER AGENCY, Plaintiff, vs FLORIDA POWER & LIGHT COMPANY, a Florida corporation, Defendant. Case No. 92-35-Civ-Orl-22 ORDER This cause came on for consideration without oral argument on the following Motion filed herein: MOTION FLORZDA POSER & LIGHT COMPANY'S EMERGENCY MOTION FOR PROTECTIVE ORDER E P FILED January 12, 1993 (/92) Thereon it is ORDERED that the Motion is granted in part and denied in peart. The Motion is granted as to documents numbered-116641 - 116656. These documents are in the nature of work-product. The Motion is otherwise denied,'he remaining II documents are not subject to privilege. The Defendant asserts that these remaining documents are protected by the work-product privilege. The Defendant reasons that since these documents were prepared by a group under the supervision of a
- lawyer, that litigation would l'ikely result from the matters under discussion by that group Ao 72A (Rev. NB2)
s+ p +4 ~4 x V' ~<K v 92-35-Civ-Orl-22 and that the documents prepared by that group would be sought in such litigation, that these documents
- were, therefore, prepared in anticipation of litigation.
This reasoning is incorrect. These documents are of a business, not legal, nature. They concern the groups function, computer software and costing models. Eliminate any possibility of litigation and these same types of documents would still be prepared.'hus, they are not litigation documents. MOTION FXLED PLAINTIFF'S MOTION FOR RECONSZDERATXON March 1, 1993 (kl06) Thereon it is ORDERED that the Motion is granted. In light of the review of the documents submitted under seal with reference to the above Motion, this Court is compelled to conclude that the Defendant has employed an excessive and improper interpretation with respect to the assertion of,the work-product privilege. Thus, this Court's Order of February 3, 1993 t'Document g103], on the Plaintiff's Motion to Compel Discovery Concerning Market Services, [Document 482] is hereby vacated. The Defendant is hereby Ordered to review its privilege assertion with regard to the Plaintiff's document ~ A simple analogy would be when Wet and Wild builds a new slide. It knows with a virtual certainty that litigation will result therefrom.
- However, the documents relating to engineering and profitability will not be considered confidential work-product merely because a lawyer leads the development group.
AO 72A (Rev. 8/82) 92-35-Civ-Orl-22
- requests, within.thirty (30)
- days, in light of the above Order.
The Defendant shall make further production in accordance therewith. As to any documents which continue to be withheld, the Defendant shall prepare and serve upon the Plaintiff a complete and detailed listing of same. The 'laintiff may thereafter move to compel any documents so
- listed, As to any documents to which the Motion to Compel is addressed, the Defendant shall file them with the Clerk of Court, under seal, at the time of filing its response to the Motion to Compel.
The Court will thereafter review these documents ~ ~ca i~e , or if too numerous, appoint a special master. The parties are advised that ih ~came review places an onerous burden upon this Court.
- Thus, sanctions will be imposed upon the parties and/or counsel if any position asserted is in any way not substantially justified.
If a special master is appointed, the parties will bear his costs in proportion to any order thereon.'his Court expects, however, that with this guidance this matter will be resolved without further Court intervention. Thus, for example, if 754 of the documents withheld are found to be subject to production, the Defendant will bear 754 of the master's fee; the remaining 254 will be borne by the Plaintiff. AO 72A (Rev, NM) ~0 j' I 92-35-Civ-Orl-22 4 ~ ~ DONE AND ORDERED at Orlando, Florida, this ~ day ~l of March, 1993. Copies furnished to: Dietrich United States Magistrate Judge COPIES MAILED ON ]9> BY Robert A. Jablon, Esquire Bonnie S. Blair, Esquire Cynthia S. Bogorad, Esquire Spiegel & McDiarmid 1350 Nev York Avenue, N.W., Suite 1100 Washington, DC 20005-4798 Deputy Clerk James .M. Grippando, Esquire Alvin B. Davis, Esquire
- Steel, Hector
& Davis 4000 SE Financial Center 200 S. Biscayne Boulevard Miami, Florida 33131-2398 L. Lee Williams, Jr., Esquire Frederick M. Bryant, Esquire Moore, Williams, Bryant, Peebles & Gautier Post Office Box 1169 Tallahassee, FL 32302-1169 " AO 72A (Rev. 8I82) Exhibit F r ~ 1 ft I 1 e I g ~ NaWataN Sc HOZ.Taint-Za, p l. I~ < ~ s 0>+CC-. N.w. w*Sr i~4TO~. 0 C. socle siOO COO.SSO~dOOO 14wc4 J Teaiy sulcus os'. NIai tsar) mls iHs TILE!0~! (202) l)2~4SIs April 6< 1993 Robert he J'ablong Eaqe Syiege'. & NcDiarmi4 135P Nev York Avenue, N.X Washington, D.C. 20005-4798 Res Doar Sobs Pith regazd to your letter yesterday requesting permission to use "Confidential" documents produced in this litigation in PMPA's motion to intervene in FsaC Docket No. ER93-465-000, the answer is no. Zt vas precisely to avoid what you now vant to do that FPI and FNPA agreed to roscrlct usage of "Confidential" materials to this lavauit,. To the extent the documents become available through the PNC discovery
- pracoss, you vill have plenty of opportunity to use them as you.
doiix' Al 4 Sincerely, +pr Edvard J. Tvomey + wl ~ -8 d I 4 CP ~em g'gl I %e .'k- IFIC T OF SERVIC I hereby certify that a true and correct copy of the foregoing has been furnished by hand delivery to J.A. Bouknight, Esq., Newman and Holtzinger, 1615 L Street, N.W., Suite 1000, Washington, D.C. 20036 and by first-class U.S. mail to William G. Walker, III, and William C. Locke, Jr., Florida Power & Light
- Company, 9250 West Flagler Street, Miami, FL 33174, with copies by hand delivery or first-class U.S. mail to all addressees on the service list for this proceeding this 21st day of June, 1993.
Law Offices Of: Spiegel & McDiarmid 1350 New York Avenue, N.W. Suite 1100 Washington, D.C; 20005 (202) 879-4000 Davx E. Pomper APPENDIX A-22 -A 4 <<l 4 \\ 4 ~ '4 0 I 7 .,p t.~A~k, P~A STATES OF CA FSX)ERAL EM<MGYREGUIMTORY CO5QdLciSIO FLORIDA POWER &LIGHTCOMPANY DOCKET NO. ER93-VOLUMEI TRANS1NFXTALLETHER AM) NO'HCE OF FILING 4 4 ~ ~ I>> 4 ~ 4 II ~ L IIII 4 L P.O. Box CB100, IWiwmi, Fl. 3N02 9100 March 19, 1993 Honorable Lois D. Cashell Secretary Pederal Energy Regulatory Commission 825 North Capitol Street, N.E. Washington, D.C. 20426 Re: Florida Power & Light Company sales. for resale to requirements customers, interchange agreements, and open access transmission
Dear Ms. Cashell:
Pursuant to section 205 of the Federal Power Act and section 35.13 of the regulations of the Federal Energy Regulatory Commission
("Commission" ), Florida Power
& Light Company
("FPL")
submits for filing the following rate schedules for transactions subject to the Commission's jurisdiction:
i)
Plorida Power a Light Company Transmission Tariff No. 1, Long-Term Fixm Transmission Service, available to all utilities and generators for wholesale bulk power transmission services (Volume II);
ii)
Plorida Power f Light Company Transmission Tariff No. 2, Short-Term Pizm Transmission Service, available to all utilities and generators for wholesale bulk power transmission services (Volume ZX);.
iii) Plorida Power
~ Light Company Transmission Tariff No. 3, Non-Fixm Transmission Service, available to all utilities and generators for wholesale bulk power transmission services (Volume ZZ);
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Honorable Lois D, Cashell March 19, 1993 Page 6
FPL is fairly compensated for the interchange services it provides.
Taken as a whole, these filings will permit all of the affected parties to plan for the long term in meeting resource needs reliably and efficiently and will provide access between generation resources and hulk-power loads connected to FPL's system or to systems interconnected with FPL.
XX.
With the one exception described in the following paragraph, FPL requests that these filings be made effective as of May 19, 1993, or 60 days after the date of this filing.
As discussed
- below, FPL is proposing to price non-firm transmission service under its new Tariff No.
3 based on a share of the transaction savings.
For hourly non-firm transactions, FPL proposes to collect one-third of the savings.
Xn addition, FPL has proposed to. recover losses on an incremental basis for these transactions.
Xn order to put these rate provisions into effect for hourly transactions in Florida, it will be necessary for FPL to make substantial changes to the computer model used for the Florida Electric Power Coordinating Group, Inc.
("FCG")
economy broker.
These changes cannot be completed within sixty days.
For this reason, FPL hereby requests an effective date for its:proposed non-firm transmission service rates applicable aglaly. to FCG broker transactions as of the date that the
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'onorable Lois D. Cashell March 19, 1993 Page 43 pricing methodology does riot require a comparison of average and incremental costs.
The quantity of losses deducted from the amount scheduled to PPL will be based on iacremeatal losses.
FPL has developed an incremental Loss Factor Matrix for each existing point of delivery and receipt on its transmission system and for different system load levels and transaction sixes.
A similar Loss Factor Matrix is included as an attachment to Schedule 1 of Tariff No. 3, which Schedule consists of a description of the methodology used to develop the Matrix.
The Loss Factor Matrix will be updated annually pursuant to Schedule 1, to ri fleet more recent actual loss data, aad a copy of the updated Loss Factor Matrix will be supplied to each noa-firm wheeliag customer that has entered into,a service agreemeat with FPL.
$ ~
FPL currently provides firm traasmission services to a number of other utilities and )oint action agencies pursuant to long-term trammission service agreemeats that are on file with the Commission.
These agreemeats include long-term commitments to deliver the output of ownership eatitlements that Florida cipal systems, FMPA and Seminole have in generating resources ia. the State of Florida.
Among these agreemeats are long-term contracts with Seminole and FMPA which permit these entities to integrate certain of their members'oads and generating resources.
FPL.does ~ propose to supersede any of its existing
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Honorable Lois D. Cashell March 19, 1993 Page 44 long-term firm transmission service.agieements with service under its open access tariffs.
These 'pre-existing 'agreements will remain in effect unless and until terminated by their own terms.
In the near future,
- however, FPL intends to amend the rates for service under those existing contracts to make them consistent with the rate provisions in FPL's 'proposed transmission tariffs.
FPL notes that FMPA has 'filed a lawsuit contesting th' appropriateness of the contractual arrangements that FMPA has in place with FPL for FPL to deliver the resources of FMPA members to the members'oads in the State of Florida.
The 'instant
,filing is not.intended to affect the services provided under the contested contracts with FMPA.
In addition to its existing long-tenn t'ransmission contracts, FPL has on file with the Commission contracts with nineteen utilities to provide specified interchange-related transmission services.
These contracts call for FPL to provide transmission services TA, TB, TC, TD, TP, and TX, which enable FPL to deliver power and energy under interchange transactions between other utilities.
The instant filing amends these interchange transmission contracts pursuant to s'ection 205 of the Federal Power Act so as to make 'the services provided under them subject to the rates,
- terms, and conditions of Tariff No.
2
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Honorable Lois D..Cashell March 19, 1993 Page 58 sufficient, appropriate. protection to.the 071,000 PERC component of SFAS 106 costs, at a more ecoaomic cost to customers
~
The foregoing principles demonstrate that the.minimal FERC component of SFM 106 costs remaining to he funded doem not warrant the burdens attendant to a.separate funding mechanism.
Thus FPG respectfully requests that the Commission waive.the external fundiag requireaaat.
7,
- Finally, PPL requests waiver of aay:other prcnrisloa of the Commission's regulations deemed necessary to permit the rate schedules suheaLtted herewith to become effective oa May 19, 1993, or 60 days ifter the date of thio filing.
A proposed Ãotice of Piling 'is included.with this filing in Volume X, followiag 'th'is Tramad;ttal Letter.
Respectfully sub';tted, Milliem Q. %alber XXX Vic Passident
- Regulatory Affairs
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Z hereby ceztlfy that I have this day Iervee a copy ot the documents ta this filiag to a11 oC the ymties zeguize4 by the Camaiesice'a zegulatfcee to he semel.
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