Text

Significant Change Analysis
	ML17297B897
Person / Time
Site:	Palo Verde
Issue date:	02/03/1983
From:	Nicholson P; Office of Nuclear Reactor Regulation
To:	;
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ML17297B895	List: ML17297B894; ML17297B896; ML17297B897;
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	ISSUANCES-A, NUDOCS 8302160488
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1 PALO VERDE NUCLEAR GENERATING STATION UNITS 1

AND 2

~"', SIGNIFICANT CHANGE ANAL'YSIS by Phillip Nicholson Antitrust Economist Antitrust & Economic Analysis Branch Division of Engineering Office of Nuclear Reactor Regulation 830216048B 830203.

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PALO VERDE NUCLEAR GENERATING STATION UNITS 1

AND 2 SIGNIFICANT CHANGE ANALYSIS A.

Introduction B.

Background

TABLE OF CONTENTS Page C.

Arizona Public Service Company (APS) 1.

Construction Permit Antitrust Review 2.

Implementation of the CP License Conditions 3.

Changes in Coordination and Wholesale Power Arrangements a.

Inland Power Pool b.

Other Changes D.

Sal t River Project (SRP) 1.

Construction Permit Antitrust Review 2.

Implementation of the CP License Conditions 3.

Changes in other Bulk Power Activities a.

Offer of Access to Palo Verde 1, 2 and 3

b.

Coordination and Wholesale Power Arrangements E.

Public Service Company of New Mexico (PSNM) 1.

Construction Permi t Antitrust Rev i ew 2.

Changes in Coordination and Wholesale Power Arrangements a.

Offers of Access to Coal-Fired Generation b.

Other Changes in Coordination and Wholesale Power Arrangements 1.

Plains Electric Generation and Transmission Cooperative (PE) 2.

Texas-New Mexico Power Company (TNMPC) 3.

City of Farmington 4.

Navajo Tribal Utility Authority (NTUA) and City of Gallup F.

El Paso Electric Company

( EPE) 1.

Construction Permit Antitrust Review 2.

Offer of Access to Palo Verde 1, 2, and 3

3.

Changes in Coordination and Wholesale Power Arrangements G.

Southern California Edison Company (SCE) 1.

Construction Permit Antitrust Review 2.

Changes Since the Construction Permit Review a.

Participation in Generating Units b.

Coordination c.

Transmission Service H.

Los Angeles Department of Water and Power (LADWP) and Southern California Public Power Authority (SCPPA)

I.

Conclusion 5

5 6

8 8

10 13 13 13 15 16 17 19 19 19 19 21 21 23 24 25 25 25 26 27 29 29 30 31 33 33 35 37

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PALO VERDE NUCLEAR GENERATING STATION UNITS l AND 2 SIGNIFICANT CHANGE ANALYSIS A.

Introduction Section 105c(2) of the Atomic Energy Act of 1954, as

amended, provides for an antitrust review of an operating license (OL) application if significant changes in the licensee's activities or proposed activities have occurred since the construction permit (CP) antitrust review.

Authority to make the significant change determination was delegated to

the, Director, Office of Nuclear Reactor Regulation (NRR) (for reactors) and to the Director, Office of Nuclear Material Safety and Safeguards (NMSS) (for production facilities), as appropriate.

The Nuclea'r Regulatory Commission (Commission) in a Memorandum and Order (CLI-80-28) dated June 30,

1980, set forth three criteria upon which to base a "significant change" determination as follows:

( 1)

The change or changes must have occurred since the previous construction permit review; (2)

The change or changes must be attributable to activities or proposed activities of the licensee; and (3)

The changed situation must have antitrust implications which 11 NRC 817, 824 (1980).

Response

of Public Service Service Company of New Mexico, Exhibit I, filed February 27, 1974.

Reply of Western Systems Coordination Council (WSCC) to Department of Energy Form EP-411(hereafter referred to as WSCC reply) April 1,

1982,

p. 2A-21.

26 Interview with PSNM personnel, December 15, 1981 (herafter referred to PSNM interview).

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20 to participate in San Juan 4 to the Cities of Farmington and Gallup and to Los Alamos County.

Farmington ultimately purchased 8.5 percent of San Juan 4, representing about 40 MW.

PSNM is also considering the construction of the New Mexico Station, four 500 MW coal-fired units complementing the San Juan Generating Station.

Although this project remains very much in the planning

stage, consistent with its earlier announced intentions to negotiate with other utilities about joint participation in future generating

units, PSNM has invited several utilites to participate, including

PGT, EPE, Community Public Service

Company, now called the Texas-New Mexico Power Company (TNMPC), Navajo Tribal Utility Authority (NTUA), and Farmington.

Tentative ownership commitments 29, have been made to NTUA and Farmington.

This apparent willingness of PSNM to engage in joint generating C

projects with other smaller utilities, regardless of ownership type, promotes opportunities in bulk power supply for its neighboring systems.

Thus, in staff's view, this change is not considered to be a "significant change" with anticompetitive effects in the activities of PSNM.

WSCC reply, p. 2B-15.

PSNM response to information requested in Regulatory Guide 9.3.

29 ibid.

PSNM interview.

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'21 b.

Other Changes in Coordination and Wholesale Power Arrangements In addition to participation in the Inland Power Pool, PSNH has both modified existing bulk power relationships and entered into new relationships with several utilities since the completion of its CP antitrust review.

These changes are discussed according to the other party involved in the arrangements.

(1)

Plains Electric Generation and Transmission Cooperative (PGT)

In June,

1975, PSNM and PGT signed the "Master Interconnection Agreement,"

which organized the piecemeal contractual arrangements ii32 33 which has developed between the two systems.

The agreement provides a

structure for (a) coordinating generation and transmission

planning, (b) studying joint participation and operation of generation and transmission

projects, (c) engaging in economy sales and other interchanges, (d) providing mutual assistance and (e) wheeling power and energy.

In one form or another most of these features have been implemented by PSNM and PGT.

Under the agreement PSNH is providing limited-term supplemental power to PGT to satisfy PGT needs for the period of time until PGT can otherwise obtain long-term capacity (most likely its Escalante Generating Station).

In 1977 the two utilities executed a service schedule for mutual Staff has not provided an exhaustive discussion of all such arrangements with every other utility, but has focused on the primary agreements PSNM has reached with several of its small neighbors.

3 PSNM FERC Rate Schedule

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PSNM FERC Rate Schedules

¹12, ¹25, ¹30, and ¹36.

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22 wheeling over specified transmission routes and PSNM also agreed to provide additional wheeling of up to 20 Hli to PGT over a different transmission line.

PSNH further agreed to engage in economy energy interchange and to provide interruptihle wheeling service.

In still other arrangements with PGT, PSNM is presently negotiating the terms of an interconnection at PGT's Escalante

Station, planned for the spring of 1984, and giving PGT an alternative route for delivering and backing up the station's capacity.

The two utilities are also discussing participation in the'olorado-New Mexico Intertie, a proposed 91-mile 230 kV line linking the two states.

PSNM has previously entered into joint participation with PGT (and EPE) in a 500 kV line linking Four Corners, Ambrosia and Albuquerque, which went into service in 1980. 36 All of these actual and contemplated arrangements between PSNM and PGT are assisting PGT in its transition from a power supply cooperative almost completely dependent on purchased power to a full-fledged generating and transmission cooperative now able to acquire power from several sources.

The changes in activities by PSNM thus do not repr esent a "significant change."

PSNM interview.

PSNM response to information requested in Regulatory Guide 9.3.

PSNH interview.

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23 (2)

Texas-New Mexico Power Company (TNHPC)

PSNM had previously entered into a "Contract for Electric Service" with TNMPC, executed in 1974.

This contract called for ( 1) the supply of firm power to TNMPC by PSNM, (2) mutual emergency and maintenance support and (3) the exchange of economy energy.

Under this agreement TNMPC has scheduled the purchase of increasing amounts of firm power, up to 72 HW, from 1976 to 1988 and ther eafter.

Subsequent amendments have raised the maximum demand to 87 HW.

Additionally, PSNM and TNMPC along with EPE have entered into a letter agreement of November 13, 1974, that establishes principles under which a major transmission line in southwestern New Mexico will be built.

PSNM has also agreed to'rovide 38 interruptible transmission service to TNHPC.

PSNM appears to have made available to TNMPC a variety of bulk power

services, including the aforementioned opportunity to participate in the contemplated New Mexico Station.

Thus, these changes in activities on the part of PSNM do not, in staff's view, represent a "significant change" with adverse effects on competition.

PSNH FERC Rate Schedule:432.

PNSN response to information requested in Regulatory Guide 9.3.

PSNH interview.

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(3)

City of Farmington In July, 1977, PSNM reached agreement with Farmington on a contract offering several bulk power services.

Apart from allowing for the 40 supply of emergency power, the coordination of maintenance, and the exchange of economy energy, the agreement provides for transmission service in certain ci rcumstances.

The contract also permits the purchase of up to 35 MW of supplemental power by Farmington from PSNM for 30 years and assists the municipal utility in fulfillingthe terms of its contract with WAPA for the purchase of peaking and firm capacity.

Further, Farmington's purchases from PSNM can be reduced through participation in future generating units.

As previously mentioned, PSNM has afforded Farmington participation in San 3uan 4 and tentative participation in the future New Mexico Station.

Similar to its relationships with PGT and

TNMPC, PSNM's recent activities involving Farmington have tended to promote availability of options for bulk power supply.

As such, these changes in activities are not deemed to constitute a "significant change."

PSNM FERC Rate Schedule 835.

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25 (4)

Navajo Tribal UtilityAuthority (NTUA) and the City of Gallup In October, 1974 PSNM and NTUA entered into an agreement for the wheeling of NTUA's power requirements from APS.

This agreement 41 gave NTUA the option to increase its reservation of transmission capacity.

An amendment exercising that option was executed in March, 1981.

PSNM and Gallup had executed a power supply contract in October,

1962, calling for a maximum of 30 MH to be delivered to three delivery points.

In September, 1976, Gallup requested the addition of a fourth delivery point and PSMN has complied. wi-th that request.

The additional wheeling and wholesale service rendered by PSNM appears consistent with its previous practices in this area.

Thus, the changes in activities of PSNM with respect to NTUA and Gallup do not, in staff's view, represent a "significant change."

F.,

El Paso Electric Company

( EPE) 1.

Construction Permit Antitrust Review As was the case with PSNM, the Department of Justice's antitrust review of EPE at the CP stage disclosed no anticompetitive problems associated 4I PSNM FERC Rate Schedule

¹27.

PSNM FERC Rate Schedule

¹2.

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I 26 with EPE's application to participate in Palo Verde.

At the time, in 1974-75, EPE was a participant in the New Mexico Power Pool, a joint owner of several generating units and a partial requirements supplier to two wholesale customers, Rio Grande Electric Cooperative (Rio Grande) and Communitv Public Service

Company, now called the Texas-New Mexico Power Company (TNMPC).

No other electric utility sought to intervene against EPE's application and, thus, the construction permit review of EPE closed coincident with the reviews of the other three original applicants,

APS, SRP and

PSNM, on May 19, 1975.

In a subsequent advice letter of September 13, 1978, relating partly to EPE's participation in the proposed Palo Verde 4 and 5 generating units

( this application was later cancelled),

the Department of Justice again expressed no antitrust concerns and, again, no utility petitioned to intervene.

2.

Offer of Access to Palo Verde 1,2, and 3

At the time of the CP review EPE alarmed to own about 15.8 percent of Palo Verde.

Over the period of tine since then, the municipal regulatory authority in the city of El Paso, to which EPE is partially subject, increasingly felt that EPE was or would become "overbuilt" and placed pressure on EPE to reduce its allocation of Palo Verde.

At about the same time, plans were being developed for the establishment of a direct current tie to Southwestern Public Service Company (SWPS),

through which EPE now expects to purchase coal-fired energy (not capacity) from Interview with EPE personnel, December 14, 1981 (hereafter referred to as EPE interview).

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27 SWPS.

Thus, EPE felt it could comply with the request of the El Paso municipal regulatory authority by offering for sale part of its Palo Verde participation share.

EPE solicited 21 utilities in seven states and eventually concluded a sale of 3.95 percent of Palo Verde to the H-S-R Public Power Agency (M-S-R) in California.

As indicated previously,

however, 44 voter decisions in 1982 forced M-S-R to cancel its participation in Palo Verde and EPE reacquired the 3.95 ownership interest.

Staff's review has provided no indication that EPE acted unreasonbly in seeking to divest itself of part of its Palo Verde ownership to M-S-R.

Although EPE contacted most of the major investor-owned utilities in seven states about the Palo Verde access, it also solicited the interest of TNMPC, one of its wholesale customers, the two major generation and transmission cooperatives in Arizona and New Mexico, AEPCO and

PGT, and a

large municipal utility in New Mexico, the city of Farmington.

Thus, staff does not view the offers of interest in Palo Verde to M-S-R and other south-western utilities as a "significant cbange" in the activities of EPE.

3.

Changes in Coordination and Wholesale Power Arrangements In addition to its entrance into the Inland Power Pool since the completion of its CP review in 1975, EPE has entered into interchange agreements with Arizona Electric Power Cooperative (AEPCO) and TNMPC.

The AEPCO interchange agreement executed in October, 1981 promotes the EPE interview.

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exchange of capacity and energy between AEPCO and EPE at the Four Corners point of interconnection between Tucson Electric Power Company and EPE and contains service schedules for emergency assistance and economy energy.

With TNHPC, EPE executed in December,

1981, an interchange agreement involving four different services:

emergency, economy energy, wheeling and maintenance.

At the wholesale level, EPE has been engaging in short-term power transactions with PGT under the terms of the New Mexico Power Pool agreement and in 1978 PGT had sought interest from EPE in supplying PGT load requirements in New Mexico.

Although a number of proposals 47 were exchanged, no firm agreement was reached and the two utilities have continued to deal with each other through the New Mexico Power Pool.

EPE has complied with requests from its two main wholesale customers, Rio Grande and TNMPC, for additional service.

In 1976 Rio Grande asked EPE to increase the capability of a part of its transmission system from 24 kV to 69 kV to serve additional load in Rio Grande's service area.

EPE provided the new service in 1977.

Also in 1976, EPE and TNHPC reached agreement on the supply of power to meet TNHPC's Alamogordo requirements.

Later, in 1981, FPE agreed to supply the 49 full requirements for TNHPC's Silver City, New Mexico load, except for EPE FERC Rate Schedule 833 4

EPE FERC Rate Schedule 0'36.

EPE response to information requested in Regulatory Guide 9.3.

48 Ibid.

EPE FERC Rate Schedule 817.

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29 peaking power available from TNMPC's generation capacity in Lordsburg and for firm power purchased by TNHPC from Southwestern Public Service and wheeled to Silver City by EPE.

Staff's review of the coordination and wholesale power arrangements executed by EPE since the completion of the CP review suggests that no changes in EPE's activities have occurred which would represent a

"significant change."

In fact, the bulk power relationships entered into by EPE since 1975 indicate a continued willingness to deal with

adjacent, and, sometimes, non-contiguous utility systems in a non-restrictive manner as apparently existed at the time of the CP review.

G.

Southern California Edison Com an SCE 1.

Construction Permit Antitrust Review Effective as of August 28,

1975, Southern California Edison Company'SCE) purchased Tucson Gas and Electric Company's 15.4 percent share of the Palo Verde project.

The Attorney General rendered anti trust advice on April 6, 1976 stating:

"Given the present applicability of the procompetitive San Onofre license conditions and the absence of any information to the contrary of which we have become aware in the course of this antitrust review, the Department believes no antitrust hearing will be necessary as a result of the addition of Southern California Edison Company as a 15.4 percent owner in the proposed Palo Verde Nuclear Generating Station."

The Attorney General's advice was published in the Federal

~Re ister on April 12, 1976.

No petitions to intervene were received by the t/ay 12,

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30 1976 deadline, thus ending the construction permit antitrust review for SCE as of that date.

2.

Changes Since the Construction Permit Review By transmittal letter dated October 1,

1979, Arizona Public Service Company as lead applicant transmitted, in connection with its operating license application, antitrust information for SCE responsive to Regulatory Guide 9.3 regarding changes in SCE's activities subsequent to the CP antitrust review.

During the time per iod from October 1,

1979 to April 30,

1981, SCE was simultaneously undergoing a review for significant changes in connection with its San Onofre 2 and 3

operating license application.

Based on that review, the NRC staff was principally concerned that SCE's activities pertaining to trans-mission services were to a limited degree foreclosing SCE's wholesale customers from bulk power supply alternatives.

Nevertheless, no significant change finding was recommended primarily because Riverside and Anaheim, the entities that were being principally affected by SCE's transmission policies, stated that the issues were being fully aired and litigated before other agencies, including the Federal Energy Regulatory Commission and the District Court.

The Regulatory Guide 9.3 information of SCE changes since the Palo Verde CP antitrust review are similar to those reviewed with respect to the San Onofre 2 and 3 Oi application.

The major changes of competitive significance are those pertaining to participation in Federal

~Re ister/Vol. 46, No. 83/ Thursday April 30,

1981, 24339.

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's 31 new generating units or involving coordination or transmission service.

These items are discussed separately below:

a.

Participation in Generating Units SCE and Portland General Electric Company (PGE) entered into a power exchange agreement in October of 1978.

During the period from October 15, 1978, through January 15, 1979, SCE made available to PGE up to 225 MW of firm capacity and associated energy.

During the period from June 1, 1981, through September 30, 1981, PGE made available to SCE up to 225

<1W of firm capacity and associated energy.

This arrangement permitted staggered construction of generation for the two parties and was of mutual benefit.

There were no negative antitrust.implications from this arrangement.

Anaheim and Riverside inquired of SCE regarding participation in Nevada Power Company's proposed Allen and Warner power plants consisting of 4-A 500 t/W and 2 - 250 MW units respectively.

SCE suggested they contact Nevada Power Company directly.

With respect to transmission from the

project, SCE advised Anaheim that if Anaheim was offered an opportunity to participate in the project, Anaheim would be involved in discussions regarding the transmission arrangements for delivery of the power.

Subsequent to the initial plans for the Allen and Warner Plants, the Warner project has been cancelled and two of the main participants,

'I SCE and Pacific Gas and Electric Company, (PGIIE), have decided not participate in the Allen proj'ect.

As a result, the project is under reconsideration.

32 Prior to the pull out of SCE and

PG8E, the following other California utilities were considering par ticipation in the project:

Turlock Irrigation District Southern California Public Power Agency Northern California Power Agency Hodesto Irrigation District, and Sacramento Municipal UtilityDistrict Two 500 kV transmission lines from Nevada to Southern California were planned to deliver the power to that area.

SCE has initiated the California Coal Project consisting of 3-500 MW coal-fired generating units.

Fifty percent of the project was offered to numerous entities in the Southwest.

Requests for participation initially exceeded the 750 MW that was available and the requesting parties were requested to negotiate a proper division among themselves.

The application for certification before the California Energy Commission has been deferred and will be reconsidered in the Spring of 1983.

At the time of deferral, Colton, Glendale,

Pasadena, 8urbank, and Riverside were to be participants in the project.

If a decision is made to proceed with the project in whole or in part, solicitation of offers to participate will be reopened.

SCE initiated a Combined Cycle Project consisting of 3 - 430 wW units and a

140 MW hydroelectric project.

SCE, in response to

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33 inquiries, has declined to offer participation in these projects.

Such a refusal in offering participation in generating projects in which SCE is the sole owner is not inconsistent with previous license commitments and understandings between SCE and the Department of Justice and therefore do not represent a significant change.

b.

Coordination SCE has entered into "Integrated Operation Agreements" with Riverside and Anaheim which have been accepted by the Federal Energy Regulatory Commission.

SCE has offered similar agreements to Azusa, Banning and Colton.

The agreement provides for full integration of SCE's generation resources with the other party, including dispatching of other's generation in conjunction with SCE's generation, transmission service, partial requirements firm power service, non-firm energy and other types of capacity and energy exchanges.

c.

Transmission Service Anaheim and Riverside requested SCE to provide firm transmission service capacity of 90 t1W and 60 HW, respectively, from Arizona Public Service Company's proposed Cholla Power Plant.

SCE responded that it could provide non-firm service until 1985 and firm service thereafter, In addition, SCE was studying the capability of the transmission system prior to 1985.

The matter became moot

34 subsequently when the Cholla units were no longer available for purchase.

Similar requests by Anaheim, Riverside and Pacific Gas and Electric for firm transmission service from Four Corners for delivery of power from New Mexico's San Juan proposed generating station became moot when New Mexico accepted San Diego Gas and Electric's proposal for purchasing

, power.

In response to a request by Salt River Project (SRP) to provide service between SCE and the California - Oregon Border to facilitate a seasonal diversity capacity exchange between SRP and Pudget

Sound, SCE declined to provide firm transmission service on the basis that it needed its entire entitlement in the transmission facilities at times.

San Diego Gas and Electric inquired as to the availability of short term firm transmission service by SCE from Palo Verde from 1979 through 1981.

SCE responded that while it was willing to provide non-firm transmission, it did not have excess capacity on a firm basis beyond its own needs.

SCE offered for sale up to 300 Mll of firm transmission capacity in its 525 kV Palo Verde - Devers transmission lines for the period 1982 to 1986 to numerous entities throughout the southwest.

Expressions of interest in the available capacity exceeded 300 MW.

The interested par ties thereafter negotiated a division of the full 300 MW of capacity.

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I 35 SCE s policies with respect to providing firm transmission service outside of its service territory has consistently been that it will only provide such service for those periods of time that it has excess capacity.

In essence, this means it will not plan and install any transmission facilities to meet the needs of others.

Although this can exert a hardship on smaller electric utilities that cannot on their own economically install economy of scale transmission, this policy is not inconsistent with the original license commitments that SCE worked out with the Department of Justice in connection with San Onofre, and which the Department has affirmed in subsequent antitrust advice letters.

including Palo Verde.

H.

Los An eles De artment of Water and Power LADWP and Southern California Public Power Authorit SCPPA Arizona Public Service Company announced by letter dated October 1, 1979 that Salt River Project (SRP) had reached an agreement with LADWP on August 18, 1977 to transfer a 5.7N ownership interest in Palo Verde to LADWP.

This announcement was followed by an application dated July 31, 1981, for amendment to the Palo Verde construction permits to reflect this transfer.

The amendment application also requested a transfer of a 5.91% ownership interest from SRP to the Southern California Public Power Authority (SCPPA).

The 5.91Ã ownership in Palo Verde was to be divided among members of SCPPA as follows:

Los Angeles Department of Water 5 Power City of Burbank 62K

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36 City of Glendale City of Pasadena City of Riverside City of Anaheim City of Colton City of Azusa City of Banning City of Vernon Imperial Irrigation District 7.N 4.5Ã Included with the amendment application was antitrust information responsive to Appendix L of 10 CFR Part 50.33a for both LADWP and SCPPA.

In response to a request from the NRC, the Attorney General rendered antitrust advice for LADWP and SCPPA by letter dated February 11, 1982.

In that letter the Attorney General stated that LADWP had previously been reviewed with respect to its proposed participation in the San Joaquin Nuclear Project, the Sundesert Nuclear Plant and most recently in Palo Verde Units 4 and 5.

Similarly, some of the members of SCPPA were reviewed with respect to the above nuclear plants and also San Onofre Units 2 and 3.

In each

instance, the Attorney General had found no reason to recommend a hearing.

The advice letter concluded with the following statement:

"Our review of the information submitted in connection with the current application, as well as other relevant information, has disclosed no evidence that would warrant a change of our earlier advice with respect to LADWP, or the members of SCPPA that were the subject of prior antitrust review.

We are not

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aware of any evidence that the other members of SCPPA have engaged in any conduct that might warrant further antitrust scrutipy.

Accordingly, it is the Department's view that no antitrust hearing is necessary with respect to the proposed tra'nsfer of ownership."

The advice letter was published in the Federal

~Re ister on March 10, 1982.

No petitions for a hearing were received during the 30-day period for intervention requests, thus effectively ending the CP antitrust review.

Staff has not received any indications that there have been any changes in the activities of LADWP or SCPPA since that time that would lead toward a significant change determination.

I.

Conclusion The staff has applied the Commission's "significant change" criteria in examining the antitrust implications of the activities and proposed activities of all of the applicants for the Palo Verde 1

and 2 operating licenses subsequent to the Commission's previous construction permit antitrust reviews.

Arizona Public Service Company (APS) and Salt River Project Agricultural and Improvement District (SRP),

two of the four remaining original applicants for the Palo Verde construction permit, had agreed to the inclusion of a wheeling license condition in the construction permit so as to mitigate potential anticompetitive problems arising from contracts with smaller utilities.

In the period since the construction permit review, both APS and SRP have provided, in staff's view, wheeling services consistent with the intent of the license condition.

Further, APS and SRP have continued to provide other types of bulk power

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38 services to smaller utilities not dissimilar to those offered prior to the completion of the construction permit review.

Public Service Company of New Mexico (PSNM) and El Paso Electric Company (EPE), the other two remaining original Palo Verde applicants, were not subjected to any license conditions at the construction permit stage.

Nonetheless, PSNM and EPE have continued to offer and provide to smaller utilities wholesale power service, wheeling service and various other coordination services on a scale comparable to, and perhaps even larger than, that undertaken prior to the construction permit review.

Subsequent to the filing of the original CP application, Southern California Edison Company (SCE),

Los Angeles Department of Water and Power (LADWP) and Southern California Public Power Authority (SCPPA) became participants and the M-S-R Public Power Agency became a tentative participant in Palo Verde.

The construction permit review of SCE, completed in 1976, did not reveal a need to impose license conditions on SCE's participation in Palo Verde.

Still later, in 1981, an examination by staff of SCE's activities since the issuance of the San Onofre 2 and 3

construction permits resulted in a staff finding that no "significant changes" in SCE's activities had occurred with respect to the San Onofre 2

and 3 operating license application.

In the brief time period since the issuance of the San Onofre 2 and 3 operating license finding, the staff has not obtained any information that woul'd suggest. a,'contrary

39 finding of "significant change" with respect to the Palo Verde 1 and 2

operating license.

LADWP and SCPPA became owners of Palo Verde in 1981.

The construction permit review of LADWP and SCPPA which terminated on April 8, 1982, disclosed no antitrust problems and H-S-R recently withdrew its participation as a result of voter decisions.

In the extremely brief period of time since the completion of the construction permit reviews of.

LADWP and SCPPA the staff has not become aware of any actual or potential antitrust problems.

Based on the foregoing analysis, the staff has concluded that the changes in the applicants'ctivities since the completion of the Palo Verde construction permit antitrust reviews do not have any antitrust implications and, thus, do not require a further, formal antitrust review at the operating license stage with respect to Palo Verde 1

and 2.

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ML17297B897

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