ML17339A360
| ML17339A360 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie, Turkey Point  |
| Issue date: | 11/16/1979 |
| From: | Jablon R FLORIDA CITIES |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 7912060020 | |
| Download: ML17339A360 (130) | |
Text
il l& P cy,o + gC UNITED STATES OF AMERICA cPys+
NUCLEAR REGULATORY COMMISSION Florida Power & Light Company Docket No. 50-3 oo~
(St. Lucie Plant, Unit No. 1)
CO Florida Power & Light Company Docket Nos. -250A (Turkey Point Plant, Unit Nos. 50-251 3&4)
FLORIDA CITIES< MOTION TO LODGE On August 9, 1979, Florida Cities 1/ moved to lodge in the above-captioned dockets FERC Opinion No. 57 titled "Opinion and Order Reversing Initial Decision and Rejecting Tariff Availability Limitations and Notice of Cancellation,"
issued on August 3, 1979, in Florida Power & Li ht Co.,
Docket Vio. ER78-19 (Phase I.).
In its August 24, 1979 Response to Florida Cities'otion to Lodge, Florida Power & Light Company ("FP&L")
objected because, among other reasons, FERC's Order was, sub-ject to reconsideration by that Commission. On September 4, 1979, FP&L applied for rehearing of Opinion No. 57. In Opinion No. 57-A issued October 4, 1979, the FERC denied FP&L's Application for Rehearing.
1/ Florida Cities include the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utility Authority, the Utilities Commission of View Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida, and the Florida Municipal Utilities Association.
II II 'C. T For the reasons set forth in their August 9, 1979 emotion to Lodge,. Florida Cities hereby respectfully move that FERC's Opinion and Order Denying Rehearing, issued on October 4, 1979 in Florida Power & Li ht Com an , FERC Docket No. ER78-19
'(Phase l), et al., a copy of which is attached, be lodged in the above-captioned dockets.
Respectfully submitted, pe c Robert A. Jablon Attorney for the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utility Authority,. the Ut ilities Commiss ion o f New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Heade, Key West, Lake Helen, Nount Dora, Newberry,, St. Cloud, and Tallahassee, Florida, and the Florida Municipal Utili'ties Association
Enclosure:
FERC Opinion and Order Denying Rehearing dated October 4, 1979 November 16, 1979 Law Offices of:
Spiegel G NcDiarmid 2600 Virginia Avenue, N. W.
Suite 312 Washington, D. C. 20037 (202)333-4500
0 41 T'
UNITED'TATES OF'MERICA NUCLEAR REGULATORY COMMISSION Florida Power & Light Company Docket No. 50-335A (St. Lucie Plant, Unit No. 1)
Florida Power & Light Company Docket Nos. 50-250A (Turkey Point Plant, Unit Nos. 50-251A 3&4)
AFFIRMATION OF SERVICE DISTRICT OF COLUMBIA, ss:
I., SUSAN G. WHITE, being first duly sworn, affirm that copies of the foregoing FLORIDA CITIES'OTION TO LODGE in the above-captioned proceeding have this 16th day of November, 1979, been served upon the following persons by deposit in the U. S. mail, first class, postage prepaid:
Chase Stepehens, Chief Herbert Dym, Esq.
Docketing & Service Section Daniel Gribbon, Esq.
Nuclear Regulatory Commission Joanne Grossman, Esq.
Washington, D. C., 20555 Covington & Burling 888 16th Street, N. W.
Lee Dewey, Esq. Washington, D. C. 20006 Fred Chanania, Esq.
Dave Evans, Esq. Mel Berge, Esq.
0'ffice of the Executive Mildred Calhoun, Esq.
Legal Director Department of Justice Nuclear Regulatory Commission 1101 Pennsylvania Avenue, N. W.
Washington, D. C. 20555 Washington, D. C. 20530 Ivan W. Smith, Chairman John E. Mathews, Jr., Esq.
Atomic Safety & Licnesinq Board Mathews, Osborne, Ehrlich, Nuclear Regulatory Commission McNatt, Gobelman & Cobb Washington, D. C. '0555 1500 American Heritage Life Building Robert Lazo, Esp. Jacksonville, Florida 32202 Atomic Safety & Licensing Board Nuclear Regulatory Commission J. A. Bouknight, Jr., Esq.
Washington, D. 'C. 20555 E. Gregory Barnes, Esq.
Lowenstein, Newman, Reis & Axelrad Jerome Saltzman, Chief 1025 Connecticut Avenue, N. W.
Antitrust & Indemnity Group Washington, D. C. 20555 Nuclear Regulatory Commission Washington, D. C. 20555 Valentine 'B. Deale, Esq.
Atomic Safety & Licensing Board Nuclear Regulatory Commission Washing ton, D. C. 20555
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r I ~1 Susan G. White Subscribed and sworn to before me thi 16th, y'f,November, 1979..
rNdtary Public /
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"-lor ida Power 5 Light Docket Vos. =378-19 Companv (Phase I) anc ZZ7a-al QP ZMZCN VQ. 57-A QP V QN AND QRDE3 DEHv VG RK-ZARIVG
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(Issuec Cc='e 4, 1979)
Qn August 3, 1979, the Comm'ss'on issued Qpinion Vo. 57
'".ese consolida ed proceedings which rejectec the proposal or Plor'id'a Power ~ Light Company (PPSL'r Company) "o limi" the,,avail ab'li "v of its irz wholesale recu'ments serv ce to cer ain namec and existing customers. Notices of cancel-lat'on f'led by PPsL wi".h regard to two ex'stinc wholesale cus-omers were a'-so rejected, because t.".ev were based on <<he Company ' = est= ictive PvailPo ty p cposa ~ Zil our dec s cn we ound that .=PGT.'s'roposa's were unjus" and unreasonable neer the standards or Sec 'ons 205 and 206 of the Peceral Power Act, part'cularlv because of the " an= compet " ve ef- ~
=ec"s. Gn Sept mher 4, 1979, ."-PSJ fi'ed an appl'cat'on for rehearing of Qp nion Vo. 57 in which '" recuests that the decision be modif'ed n 'certain .limited respec"s. 1/ The Com-
."any has raised no legal or fac"ual consideration not pre-vt.ously consicerec anc we sha'1 ceny the application. Foweve we wish to reemphasi=e the holding o= our opinion in 1'ch" of seve a'ecresentat'ons made bv .=Ps .". 'ts lates" "leac'nc.
now r ".esents wt 11 to provce wholesa'e ants se v'ce unde 'tS to a number o ."-'cr'ca s 'n pcc'on to those presen ecu'i
'4 i I l y served:
rtiQ e or t~'+ Ii~4e ) wibc so
~ IO A V e =ol 1 o W,C: C'ew's on; Vo v s e op S<<1v i gps.
e se v tgpggr s i ap ~
"cck t '.los. =Z78- 9
'Phase .) anc =R";9-8
- 'or'da P~ bl'c Ut'L't'es at Fernardina Beach;
."-ort Pierce; Gr en Cove Spr ncs; Homes- ad; Jacksonville Beach; Key west; r,ake Helen; Lake North; Hew Smyrna Beach; Starke; Vero Beach; CLay "-Lectric Ccoperat ve; Florida Keys ="Lec"ric Cooperative; Glades "=Lectr ic Ceo@erat'e; Lee County ="'ec rc Cooperat've; Qkefenokee Rural
"-Lec" 'c Cooperat've; Peace Hirer "=Lee =ic Cocpe at've; and Suwane Valley ZLectric Coope a-ive. Reasonable terms and cond't'ons, includinc asonab'e nctice prcvisions, w'lL o'f cou be necessary, as the Comm'ss'on 'tself ecccn'=es (Aimeo, .". 40).
~he Companv 's wiing tc con"inue provid'nc service to the cooperatives listec above to
""e ex ent of their loads 'n the geographical areas in which '"ey are now = ceivinc serv'ce "om ."-'PAL. 2/
Ho con t=oversv .emains recardinc the prov 's'on o wholesa'e r eculr ements serv ce to these utilit~es. ALso 755 now acrees to provide recu'rements service to "new ut'Les g
's serv'ce a ea "hat t'~es i= present'v se vesmaya beretail establish ec ov those en-
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he sole purpose of .=Psi.'s agpl'cat'on is ' r ecues" hat we moci=y Qp'nion Mo. ~7 o "erm' the inse on of a new ava LabiLity restric ion into the Ccm any's ecu're-ments serv ce tar "fs.:PaL now, procoses to exc'uce larce sel--su-,-c; c, ent uil rs i,.nclucinc the ~acksorv a
=-Lectric Authcrity, the Cr'arco Utilities Ccmmissio ar.c
=".e Citv of Gainesv LLe. The Com=anv does nct repre sent that any such Lar-"e utility has recuestec serv ce.
A QL'cat'on o~ B.e.'.e ar inc or ."-'or 'ca Power L'cn Company at 3.
Hcmes"ead, ~ere g gv Ho o rs
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threse uv as>> urer I c v4 he not c s o ar.c carce'Lation re v OCTO I Qgi n'cr Nc. i7.
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=;".e ar"u. en-s consicered dur in@, ou= ear ie>> cel'be at'ons.
it ar~ s t.'".at our cec's'on should be mod'='ed in 'cht of t..e Compac.y's wnee'in@ "-ol'cy and opgortunit'es or=ared to other util t'es to "artie'pat in ."-Pat,'s St. E,ucie No. 2 nuc ear
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gower We shall not cons cer adoption o" the Company' new "roaosal at this s age of the "roceedincs. I FPSZ, wishes repose any term or conc'ion of se vice under i"s ect.'rements "arirf, the Ccmaany shou'd do so in a new f'linc where'n shou'c Le "-recared to cemonst" at that the "the least an 'corn-et't've " method o obtaining lecit'-ate "rocosa's "l nn nc or other ob j ectives. 4/
T.".e Comm'ss-.on orders:
.'P&~ ' aaalication or rehear in' Oainion Ho . ~7 is her ebv cenied.
3v, "he Comm'ss'on.
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Ke& 4 'JZQ Sec=et~-y.
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UNITED STATES OF REGULATORY COMMISSION AY&RICA'UCLEAR Before the Commission In the Matter of,:
)
Florida Power 6 Light Company ) Docket No. 50-335A (St. Lucie Plant, Unit No., 1) )
)
)
Florida Power a Light Company ) Docket No. 50-250A (Turkey Point Plant, .Units 3 ) 50-251A and 4)' ),
CERTIFICATE'F SERVICE I HEREBY CERTIFY that copies of the following,:
RESPONSE OF FLORIDA POWER 6 LIGHT COMPANY TO CITIES MOTION TO.LODGE have been served on the persons shown on the attached list 'by deposit in the United States Mail, properly stamped and addressed on August 24, 1979.
By: .
n d~+ /Jr
~~'J.A. Bouknz.g~ ~ O',. Jr.
.Lowenstein, Newman, Reis, Axelrad 6 Toll 1025 Connecticut Avenue, N.W. ~ ~
'b Washington, D.C. 20036 Counsel for Florida Power 6 Light Company /
'b
f~
Chairman Joseph M. Hendrie Office of the Commissioners U.S. Nuclear Regulatory Commission t
Robert A. Jablon, Esquire Spiegel 6 McDiarmid 2600 Virginia Avenue, N.W.
Washington, D.C. 20555 Washington, D.C. 20037 Commissioner Victor Gilinsky Melvin G. Berger, Esquire Office of the Commissioners Antitrust Division U.S. Nuclear Regulatory Commission U.S. Department of Justice Washington, D.C. 20555 P.O. Box 14141 Washington, D.C. 20044 Commissioner Richard Kennedy Office of the Commissioners Lee Scott Dewey, Esquire U.S. Nuclear Regulatory Commission Counsel for the Staff Washington, D.C. 20555 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Commissioner Peter Bradford Office of the Commissioners C.R. Stephens, Supervisor (20)
U.S. Nuclear Regulatory Commission Docketing and Service Station Washington, D.C. 20555 Office of the Secretary of the Commission Commissioner John F. Ahearne U.S. Nuclear Regulatory Commission Office of the Commissioners Washington, D.C. 20555 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 William C. Wise, Esquire Suite 200 Alan S. Rosenthal, Esquire 1019 19th Street, N.W.
Atomic Safety and Licensing Washington, D.C. 20036 Appeal Board Panel U.S. Nuclear Regulatory Commission William H.. Chandler, Esquire Washington, D.C. 20555 Chandler, O'Neal, Avera, Gray, Lang & Stripling Jerome E. Shar fman, Esquire P.O. Drawer 0 Atomic Safety and Licensing Gainesville, Florida 32602 Appeal Board'anel U.S. Nuclear Regulatory Commission Jerome Saltzman Washington, D.C. 20555 Chief, Antitrust and Indemnity Group Richard S. Salzman, Esquire U.S. Nuclear .Regulatory Commission Atomic Safety and Licensing Washington, D.C. 20555 Appeal Board Panel /
U.S. Nuclear Regulatory Commission Samuel J. Chilk Washington, D.C. 20555 Secretary U.S. Nuclear Regulatory Commission Robert M.'azo,...Esquire '.: .. Washington, D.C. 20555 Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Ivan W. Smith, Esquire Chairman, Atomic Safety and Licensing Board Panel U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Valentine B. Deale, Esquire Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555
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UNITED STATES OF AMERICA (P j+
NUCLEAR REGULATORY COMMISSION Before the Commission II y& >>,4>>
pc+ qV~4 In the Matter of: ) 4
)
Florida Power & Light Company ) Docket No. 50-335A (St. Lucie Plant, Unit No. 1) )
.)
Florida Power 6 Light Company ) Docket No. 50-250A (Turkey Point, Plant, Units 3 ) 50-251A and 4) )
RESPONSE OF FLORIDA POL'7ER LIGHT COMPANY TO CITIES
'MOTION TO LODGE On August 9, 1979, the Cities moved to "lodge" a decision of the FERC in FERC Docket No. 78-19, which concerns Florida Power & Light Company (FPL).. 2/ FPL opposes the motion.
Section 105a of the Atomic Energy Act authorizes the Commission to: act on the basis of a finding "by a court of competent juris-diction"'hat a licensee has violated the antitrust laws " in the conduct of the licensed activity." The FERC is not a court of competent jurisdiction, and it did not, by the terms of its decision, determine the existence of any violation of the anti-trust. laws. Moreover, a decision concerning the justness and reasonableness of a tariff provision submitted in 1977 (and which never took effect) cannot conceivably have any relevance to the 1/ to clerical error, counsel for FPL was not served with Due a the Motion and for the Cities did not receive has authorized it FPL's until August 24. Counsel counsel to represent that the Cities have no objection to filing of this response out of time.
2/ The decision of the 'FERC is subject to reconsideration and judicial review. FPL .intends to reauest reconsideration.
question before this Commission whether certain findings, by the United States Court of Appeals for the Fifth Circuit con-cerning events which took place before 1970 establish a violation of, the antitrust laws "in -the conduct of the li.'censed activity" which warrants initiation of proceedings by this Commission.
The FERC decision, which was issued on the basis of an expedited hearing schedule which did, not permit adequate discovery into or consideration of the truth or falsity of antitrust allegations, does not purport to determine antitrust issues.
The decision is subject to reconsideration by the FERC and to judicial review, and is, therefore, by no means final. Moreover, it is not relevant to any of the issues pending here,. The Motion seeks only to prejudice'he Commission's consideration of the matters properly before it. FPL requests that it be denied..
Respectfully Submitted, Daniel M. Gribbon Herbert Dym Covington & Burling 888 16th Street, N.W.
Washington, D.C; 20006 J.A. Bouknight, Jr.
Lowenstein, 'Newman, Reis, Axelrad
& Toll 1025 Connecticut Avenue, N.W.
Washington, D.C. 20036 John E. Mathews, Jr.
Mathews, Osborne, Ehrlich, McNatt, Gobelman & Cobb 1500 American Heritage Life Bldg.
ll East Forsyth Street Jacksonville, Florida 32202 fi By: ~/i<
/
,t J.A. Bouknz,ght, Jr.
Counsel for Florida Power & Light Company August 24, 1979
0 0 UNITED STATES OF AY%RICA NUCLEAR REGULATORY COMMISS ION Before the Commission In the Matter of:
Florida Power 'G Light Company Docket No. 50-335A (St. Lucie Plant, Unit No. 1)
Florida Power 6 Light Company Docket: No. 50-250A (Turkey Point Plant, Units 3 and 4) 50-251A'ERTIFICATE.
OF SERVICE I HEREBY CERTIFY that copies of the following:
RESPONSE OF FLORIDA POWER 6 LIGHT COMPANY TO CITIES MOTION'O LODGE have been served on the persons shown on the attached list by deposit in the United States Mail, properly stamped and addressed on August 24, 1979.
- J.A. Bouknxght', Jr.
/Lowenstein, Newman, Reis, Axelrad 6 Toll 1025 Connecticut Avenue, N.N.,
Washington, D.C. 20036 Counsel for Florida Power a Light Company /
l~
Chairman Joseph M. Hendrie Office of the Commissioners U.S. Nuclear Regulatory Commission t
Robert A. Jablon, Esquire Spiegel 6 McDiarmid 2600 Virginia Avenue, N.W.
Washington, D.C. 20555. Washington, D,.C. 20037 Office of'he Victor Commissioner Gilinsky Commissioners Melvin G. Berger, Esquire Antitrust Division U.S. Nuclear Regulatory Commission U.S. Department of Justice Washington, D..C., 20555 P.O. Box 14141 Washington, D.C. 20044 Commiss'ioner Richard Kennedy Office of the Commissioners Lee Scott Dewey, Esquire U.S. Nuclear Regulatory Commission Counsel for the Staff Washington, D.C.. 20555 U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Commissioner Peter Bradford Office of the Commissioners C.R. Stephens, Supervisor (20)
U.S. Nuclear Regulatory Commission Docketing and Service Station Washington, D.C.. 20555 Office of the Secretary of the Commission Commissioner John F. Ahearne U.S. Nuclear Regulatory Commission Office of the Commissioners Washington, D.C. 20555 U.S. Nuclear'egulatory Commission Washington, D.C. 20555 William C'. Wise, Esquire Suite 200.
Alan S. Rosenthal, Esquire 1019 19th Street, N.W.
Atomic Safety and Licensing Washington, D.C. 20036 Appeal Board Panel U..S. Nuclear Regulatory Commission William H. Chandler, Esquire Washington, D.C. ,20555 Chandler, O'Neal, Avera, Gray, Lang 6 'Stripling Jerome E.,Shar fman, Esquire. P.O. Drawer 0 Atomic Safety and Licensing Gainesville, Florida 32602 Appeal Board Panel U.S. Nuclear Regulatory Commission Jerome Saltzman Washington, D.C. 20555 Chief, Antitrust and Indemnity Group Richard S. Salzman, Esquire U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Washington, D.C. 20555 Appeal Board Panel /
U.,S. Nuclear Regulatory Commission Samuel J.. Chilk Washington, D.C. 20555 Secretary U.S. Nuclear Regulatory Commission Robert M.; L'azo,.-;.Esquire '-; Washington, D.C. 20555 Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Ivan W. Smith, Esquire Chairman, Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Valentine B. Deale, Esquire Atomic Safety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555
gs
'b y++~c UNITED STATES OF os++
REGULATORY COMMISSION 2QKRICA'UCLEAR Before the Commission In the Matter of:, ) 'b Power 6 Light Company )
)'lorida Docket No. 50-335A (St. Lucie Plant, Unit No. 1) .)
)
Florida Power Light Company S ) Docket N~. 50=2YOA (Turkey Point Plant, Units 3 ) ~0-251A and 4) )
RESPONSE'F FLORIDA PO7'TER, 6 LIGHT COMPANY TO CITIES MOTION TO LODGE I
On August 9, 1979, the Cities moved to "lodge" a decision of the FERC in FERC Docket No. 78-19 which concerns.
Florida Power 6 Light Company (FPL).. 2/ FPL opposes the motion.
Section 105a of the Atomic Energy Act,authorizes the Commission>
to act on the basis of a finding "by a court of competent juris-diction" that a~licensee has violated the antitrust laws " in the conduct of the licensed activity."
V The FERC is not a court of competent jurisdiction, and it did not, by the terms of its decision, determine the existence of any violation 'of the anti-trust laws. Moreover, a decision concerning the justness and reasonableness of a tariff provision submitted in 1977 (and which never took effect) cannot conceivably have any relevance to the 1/ Due to a clerical error, counsel for FPL was not served, with the Motion and did> not receive it for the Cities has authorized FPL's counsel to represent until August 24. Counsel that the Cities have no objection. to filing of this response out of time.
2/ The decision of the FERC is subject to reconsideration and judicial review. FPL intends to recruest reconsideration.
I
~ I r
question before this Commission whether certain findings by the United States Court of Appeals for the Fifth Circuit con-.
cerning events which took place before 1970 establish a violation of the antitrust laws "in the conduct of the licensed activity" which warrants initiation of, proceedings by this Commission.
The FERC decision, which was issued on the basis of an expedited hearing schedule'hich did not permit adequate discovery into or consideration of the truth or falsi;ty of antitrust all'egations,,does not purport to determine, antitrust issues.
The decision is subject to reconsideration by the FERC and to judicial review, and is, therefore, by no means final. Moreover, it is not relevant to any of the issues pending here. The Motion seeks only to prejudice the Commission's consideration of the matters properly before it. FPL requests that it. be denied.,
Respectfully Submitted, Daniel M. Gribbon Herbert Dym Covington & Burling 888 16th Street, N.W.
Washington, D.C. 20006 J.A. Bouknight, Jr.
Lowenstein, Newman, Reis, Axelrad
& Toll 1025 Connecticut Avenue, N.W.
Washington, D.C. 20036 John E. Mathews, Jr.
Mathews, Osborne, Ehrlich, McNatt, Gobelman & Cobb 1500 American Heritage Life Bldg.
ll East Forsyth Street Jacksonville, Florida 32202 By: ~!r~' !
J.A. Bouknxght, Jr.
Counsel for Florida Power & Light Company August 24, 1979
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of )
)
FLORIDA POHER & LIGHT COMPANY ) NRC Docket No. 50-335A (St. Lucie Plant, Units No. 1 and ) 50-389A No. 2) )
)
FLORIDA POHER 5 LIGHT COMPANY ) NRC Docket No. 50-250A (Turkey Point Plant, Units ) 50-251A No., 3 and No. 4)
STAFF'S ANSWER TO FLORIDA CiTIES MOTION TO L'ODGE By motion of August 9, 1979 Florida Cities have requested leave to lodge J%~
an August 3, 1979 opinion by he Federal Energy Regulatory Commission in Dkt. No. ER78-19 for consideration by the Commission as part of its determination of whether to conduct a proceeding under 5105(a) of the Atomic Energy Act of 1954, as amended, in connection with the above captioned matter.
Staff does not oppose Cities motion to lodge the document in question.
Respectfully submitted, Lee d~g.
Scott Dewey Counsel for NRC Staff Fredric D. Chanania Counsel for NRC Staff
. Dated'at Bethesda, Maryland this 23rd day of August, 1979.
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION En the Matter of FL'ORIDA POWER & LIGHT COMPANY NRC Docket Nos. 50-335A (St. Lucie 'Plant, Units No. 1 ~
. 50-389A and No. 2) )
)
~, FLORIDA POWER & LIGHT COMPANY ') NRC Docket Nos. 50-250A (Turkey Point Plant, Units ) 50-251A
! No. 3 and No. 4) ) ~
I CERTIFICATE OF SERVICE.
I hereby certify that copies of STAFF'S ANSWER TO'LORIDA CITIES MOTION TO LODGE, in the above-captioned proceedings, have been served on the following by deposit in the United States mail, first class, or, as indicated by an asterisk, through deposit in the Nuclear Regulatory Commission's internal mail system, this 23rd day of August, 1979.
Lvan M,.'Smith, Esq., Chairman J.A. Bouknight, Jr., Esq.
Atomic Safety and Licensing Board- E. Gregory Barnes, Esq.
Panel Lowenstein, Newman-, Reis, Axelrad & Toll U.S. Nuc'1ear Regulatory Commission 1025 Connecticut .Avenue, N.M.
Mashington,'D.C. 20555
- Mashington, D.C. 20036 Valentine B. Deale, Esq. Tracy Danese, Esq.
Atomic Safety and Licensing Board Vice President for Public Affairs
'Panel Fl ori da Power & Li ght Company 1001 Connecticut Avenue, N.'M. P.O. Box 0131QO Mashington, D.C. 20036 Miami, Florida 33101 Robert M. Lazo, Esq., Member Jack M..Shaw, Jr., Esq.
Atomic Safety and Licensing Board John E. Mathews, Jr ., Esq..
Panel Mathews, Osborne, Ehrlich, McNatt, U.S. Nuclear Regulatory Commission 'Gobelman & Cobb .
Mashington, D.C. 20555,
- 1500 American Heritage Life Building 11 East Forsyth Street Docketing and Service Section Jacksonvil,le, Florida 32202 Office of the Secretary U,S, Nuclear Regulatory Corrmission Harry M. Wright Mashington, D.C. 20555
- Executive Vice President Semino)e Electric Cooperative, Inc.
Jerome Sa'ltzman, Chief Suite 108 Antitrust & Indemnity Group 2410 East Busch Boulevard U,S, Nuclear Regulatory Commission Tampa, Flori da 33612 Mashington, D.C. 20555 *
'1 4> ~i
Hr. Robert E, Bathen Daniel H. Gribbon Nr. Fred Saffer Herbert Dym R,M; Beck 5 Associates Covington 5 Hurling P.O.. Box 6817 888 Sixteenth Street, N.M.
Orlando, Florida 32803 . Washington, D.C... 20006 Dr, John'M. Mi1son Chairman Hendrie .
Wilson 5 Associates Office of the Commission 2600 Virginia Avenue, N.W.
U.S. Nuclear Regulatory Commission Washington, D,C. 20037 Mashington, D. C. 20555 *
'Thomas Gurney, Sr., Esq. Commissioner Gilinsky 203 North Nagnolia Avenue Orlando, Florida 32802 Office of the Commission U.S. Nuclear Regulatory Commission Robert A. Jablon, Esq. Washington, D: C. 20555
- Daniel J. Guttman, Esq. Commissioner Kennedy .
Al'an J. Roth, Esq. .
2600 Yirginia Avenue, N.M. Office of the Commission U.S. Nuclear Regulatory Commission Washington, D,C. 20037 Washington, D. C. 20555
- Donald A. Kaplan, Esq.
Commissioner Bradford Da vi d A. Leek i e, Es q. Office of the Commission P.O. Box 14141 U.S. Nuclear Regulatory Commission Washington, D. C. 20555
- Washington, D.C. 20044 W)11iam H. Chandler, Esq.
Chandler, O'Heal, Avera, Gray, Commissioner Ahearne Land 5 Stripling Office of the Commission Post Office Drawer 0 U.S. Nuclear Regulatory Commission Washington, D. C. 20555
- Gainesville, Florida 32602 Mi-lliam C. Mise, Esq.
Robert Meinberg, Esq.
Suite 200,1019 19th Street, N.M.
Mashington, D.C. 20036 Mr. David Springs Southern Engineering Company 1000 Crescent Avenue, N.E.
Atlanta, Georgia 30309
,Fredric
~
D. Chanania c-Q4t ~&
Atomic Safety and. Licensing Board Counsel for NRC Staff, Panel U.S, Nuclear Regulatory Commission Washington, D.C. 20555
- 4~ (Qi I
~ UNITED STATES. OF AMERICA
~
NUCLEAR REGULATORY 0 ISSION Florida Power & Light Company )
(St. Lucie Plant, Unit No. 1) ) Docket No. 50-335A
)
Florida Power & Light Company )
(Turkey Point Plant, Unit Nos. ) Docket Nos. 0-250A 3&4) ) a -
50-251 FLORIDA CITIES'OTION TO LODGE The Commission is considering whether to conduct a 5105(a) antitrust proceeding in these dockets, possibly to be consolidated with the 5105(c) proceeding in Florida Power & Light Company (St.
Lucie Plant, Unit No. 2), NRC Docket No. 50-389A. In its pleadings, Florida Power & Light, Company ("FP&L") has raised issues as to the scope of the Fifth Circuit decision in Gainesville Utilities De artment v. Florida Power & Li ht Co., 573 F.2d 292 (5th Cir. 1978), which would trigger such $ 105(a) proceedings. Other parties have contended that the violation of the antitrust laws found in Gainesville, ~su ra, must be deemed continuing. 1/
On August 3, 1979, in deciding issues relating to Florida Power
& Light Company's proposed tariff restrictions on wholesale power and coordination, the Federal Energy Regulatory Commission considered the finding in Gainesville, ~su ra, and; reviewed FP&L,'s conduct. Florida Cities 2/ believe that this Opinion is relevant to the issues stated 1 ~E. .. "Reply of Florida Cities in Opposition to Memorandum by Florida Power & Light Company," pp. 12-23, September 5, 1978.
2/ Florida Cities include the Fort Pierce Utilities,Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utility Authority, the Utilities Commission of New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key.West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida, and the Florida Municipal Utilities Association.
j 4I 0 EI
above and particularly to the conclusion that FPaL's anticompetitive activities must be deemed to be continuing.
Therefore, they move to lodge this opinion. 1/
WHEREFORE, Florida Cities respectfully request that the "Opinion and Order Reversing Initial 'Decision and Rejecting Tariff Availability Limitations and Notice of Cancellation", Florida Power a Light Company, FERC Docket No. ER78-19 (Phase I), et al.,
(Opinion No. 57, August 3, 1979) be lodged.
Respectfully submitted, Robert A. Jablon Daniel Guttman Attorneys for the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utility Authority, the Utilities Commission of New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utiities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud, and Tallahassee, Florida,, and the Florida Municipal Utilities Association Law Offices of.:
Spiegel 6 McDiarmid 2600 Virginia Avenue, N. W.
Suite 312 Washington, D. C. 20037 (202)333-4500 1/ In the event that the 'Commission should determine that it cannot determine whether $ 105(a). is applicable as a matter of law without an evidentiary review of one or more issues, this Opinion and Order should be made part of the record and considered by the officers assigned to make such initial determination.
J 4
'UNITED STATES OF AMERICA LEAR REGULATORY COMMISSI Florida Power & Light Company )
(St. Lucie Plant, Unit No. 1) ) Docket No. 50-335A
)
Florida Power & Light Company )
(Turkey Point Plant, Unit Nos. ) Docket Nos. 50-250A 3&4) ) and 50-251A CERTIFICATE OF SERVICE I hereby certify that the foregoing MOTION TO LODGE has been served on the following persons by deposit in the United States mail, first class, postage prepaid, this 9th day of August, 1979:
Chase Stephens, Chief Herbert Dym, Esq.
Docketing & Service Section Daniel Gribbon, Esq.
Nuclear Regulatory Commission Joanne Grossman, .Esq.
Washington, D. C. 20555 Covington & Burling 888 16th Street, N. W.
Lee Dewey, Esq. Washington, D. C. 20006 Fred Chanania, Esq.
Dave Evans, Esq. Mel Berger, Esq.
Office of the Executive Mildred Calhoun, Esq.
Legal Director Department of Justice Nuclear Regulatory Commission Antitrust Department Washington, D. C. 20555 1101 Pennsylvania Avenue, N. W.
Wash'ing ton, D.. C. 20530 Ivan W. Smith, Chairman Atomic Safety & Licensing Board John E. Mathews, Jr., Esq.
Nuclear Regulatory Commission Mathews, Osborne, Ehrlich, Washing ton, D. C. 20555 McNatt, Gobelman & Cobb 1500 American Heritage Life Bldg.
Robert Lazo, Esq. ,Jacksonville, Florida 32202 Atomic Safety & Licensing Board Nuclear Regulatory Commission J. A. Bouknight, Jr., Esq.
Washington, D. C. 20555 E. Gregory Barnes, Esq.
Lowenstein, Newman, Reis & Axelrad Jerome Saltzman, Chief 1025 Connecticut Avenue, N. W.
Antitrust & Indemnity Group Washington, D. C. 20555 Nuclear Regulatory Commission
'Washington, D. C. 20555 Valentine B. 'Deale, Esq.
Atomic Safety & Licensing Board Nuclear Regulatory Commission Washington, D. C. 20555 Robert A. Jablon.
Attorney for the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utility Authority, the Utilities Commission of New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St. Cloud and Tallahassee, Florida,,and the Florida Municipal Utilities Association
Il II UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY'OMMISSION OPINION NO. 57 Florida Power & Light ER78-19 Company (Phase, I) and ER78-81 OPINION 'AND'RDER REVERSING INITIAL.DECISION AND REJECTING TARIFF AVAILABILITY LIMITATIONS AND NOTICE OF,'ANCELLATZON Issued: August. 3, 1979 DC-A-7
a5 41 Q>
UNZTED STATES OF AMERZCA FEDERAL ENERGY REGULATORY'OMMZSSZON Flor'da Power 5 Light Docket Nos. ER78-19 Company (Phase Z) and ER78-81 OPZNZON NO. 57 APPEARANCES Harry A Poth, Jr., Robert T. Hall ZZZ, James K. Mitchell and F o L. Norton ZV Rei & Priest for F ori a Power & Light Company William H. Chandler, William C. Wise and Robert Weinbez,. for Seminole Electric Cooperative Robert A. Jablon,Daniel J. Guttman and S'andra J.,Strebel for the Utilities Commission of New Smyrna Beach, Fort Pierce Utilities Authority, Cities of Starve and Homestead, Florida Robert F. Sha izo and Hazve L. Reiter for the Staff of the Fe era, Energy Regulatory Commission r
WHCLESA'L'E ELECTRIC SERVICE: AVAILABILITY:
ANTITRUST "UNITED STATES CF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners'. Charles B. Curtis, Chairman; Georgiana Sheldon, and Matthew Holden, Jr.
Florida Power & Light ) Docket Nos.'R78-1'9 Company ). (Phase I) and ER78-81 OPINION NO 57 I
OPINION AND ORDER REVERSING INITIAL DECISION AND REJECTING TARIFF AVAILABILITY LIMITATIONS AND NOTICE OF CANCELLATION (Issued August 3, 1979)
Before .the Commission is a consolidated proceeding to determine whether certain limitations on the availability of firm wholesale reauirements service, along with notices of cancellation of, such service to specific wholesale customers, are unjust, unreasonable or unduly discriminatory, and particularly whether they are anticompetitive in effect.
With one exception, we find that the proposed limitations on recuirements service availability have not been justified..
Accordingly, we reject these tariff provisions. Moreover, since the notices of cancellation are founded upon one of these rejected limitations on availability, they must likewise be rejected.
To set the stage for our discussion, we wish to state at the outset our view that, where a utility possessing market power in a relevant market seeks to amend a general tariff to impose conditions which foreclose supply options or increase the costs of competitors, or which otherwise contribute to the. acauisition'r maintenance: of monopoly power, its application for amendment must be, rejected and found unjust and unreasonable under Sections,,205 and 206 of the Federal Power Act - unless the utility can show that compelling public interests justify the service'concitions.
gi Docket 'Dos. ER78-19, et al. Moreover, even where overriding public policy objectives are shown to justify some restriction on wholesale service, such a utility must be called upon to demonstrate that its orooosal is the least anticompetitive method of obtaining legitimate planning or other objectives.
Gn the basis of our analysis of the record before us, we conclude that FP&L's proposed tariff restrictions would eliminate the only practical source of base-load power or energy to competing utilities within the markets dominated by the Company. Fur thermore, the proposed restr ictions would. appear to create. the potential for additional anti-competitive effects by inhibiting the formation of new distribution utilities within these -markets. FP&L has failed to satisfactorily demonstrate countervailing public interests that warrant approval of any of these proposals, except for the one which would provide separate partial reauirements service. To the extent that legitimate pur-poses are sought to be attained by FP&L, there appear to be a number of alternative means of less anticompetitive effect for their accomplishment.. The Commission wishes to emphasize that we are not today holding that a utility with market power is, ocr se, precluded from amending a general tariff to impose conditions which limit service availability. The Federal Power Act accords a utility the right to propose such limitations and an opportunity to demonstrate that its proposed change in service is just and reasonable. Zn the instant case, we find only that FP&L has failed to carry its burden. of justification.
An initial comment is also in order concerning the applicability of antitrust laws and policies to- our pro-
-ceedings. From its inception, this proceeding has focused on issues related to the justness and.reasonableness of FP&L's rate proposals when evaluated in light of their alleged anticompetitive effects. The allegations and evidence of staff and the intervenors together with the associated responses of the Cbmpany have coalesced into issues typi-cally examined .in the context. of a monopolization case under Section 2 of the Sherman Act. The Commission acknow-ledges that it is not specifically responsible for enforcing the Sherman Act or any other of this nation's antitrust laws. And we wish to emphasize that in evaluating the anti-competitive effects of a proposed rate change and in making findings with respect thereto, we do not make findings that violations. of the antitrust laws have occurred. instead, it xs our oblication to evaluate the public policies expressed in Federal antitrust laws and to reflect tnose policies in the conduct of our responsibilit'es under the Federal Power Act. 1/ his we have endeavored to do in the instant case.
1/ it do is now beyond cuestion that antitrust law and policies relate to this Commission's responsibilities under the Federal Power Act. See, Gulf States Utilities Co. v. FPC, 411 U.S. 747..(1973.); and FPC v. Conwav Cor oration, 426 U.S.
~5' Docket Nos. KR78-19, et al. ~~nile we believe our evaluation of the anticompetitive ef ects of the proposal is correct and supported by the reccrc, we recognize that these anticompetitive effects may not have been demonstrated with the rigor as would be demanded in proceedings where specific findings of violations of the antitrust laws are at
'ssue with attendant potential for the imposition of civil and criminal penalties. Lastly,, we wish to note that the fairly elaborate account of FP&L's oast conduct in its market place is not intended by this Commission to be a determination of factual disputes which may be the subject of litigation in other forums. Rather we mere1y observe that the evidence in this record of that past conduct casts a shadow over FP&L's claimed need to restrict service and, therefore, is of pro-ba t ive value in determining whether the Company. has sa tis-factorily carried its burden of justification for the prooosed service limitations. The structural and conduct analyses required in an antitrust. proceeding, and presented to us here, are of considerab1e assistance in isolating demon-strated anticompetitive effect from unfocused allegations.
Zt is important to examine the markets in which relevant electr ic services are bought and sold and then determine how the questioned rate provisions may affect the competition, or potential competition, in these markets.. This opinion attempts,to oresent our interpretation of the facts and law along these, lines.
BACKGROUND The .Procedural Histor On October 14, 1977, FP&L filed in Docket No. ER78-19 proposed changes to its firm wholesale electric tariff, schedule SR-l, which would bifurcate that schedule into a full requirements schedule SR-2 and a separate partial requirements schedule PR, and increase the rates for each of these services. Under schedule SR-1 firm service has been generally available "in all territory served by the Company." FP&L now proposes to limit the availability of f'irm wholesale services to those existing customers named in the two new schedules, which previously purchased under schedule SR-1.- Also, the Company would limit service under schedule PR 'to existing customers which do not own sufficient generating capacity to meet their peak load requirements.
('
Docket Vivos.. ER78-19, et al.
In a related action, FP&L filed. in Docket Vo. ER78-81, on December 1, 1977, a notice of cancellation of firm partial requirements service to one of its SR-1 customers, the City of Homestead; Florida, which has su'fficient capacity to neet its load. Instead, the Company would make wholesale sales to Homestead under rate schedules in an interchange agree-ment between these two parties. Under Sections 205 and 206 of the Federal Power Act,. a utility must receive Commission approval to replace one service to a wholesale customer with another servi'ce. Commission jurisdiction over changes in rates, ch'arges, classification. or service necessarily en-compasses this situation. The Commission must f ir st f ind that this customer reclassification is in the public .interest.
See, Penns lvania Nater and Power Compan v.. FPC, 343 U.S. 414'22-424 (1952).
By order of December 30, 1977, the Commission consoli-
-dated these dockets, suspended both the tariff availability restrictions and the Homestead cancellation for five months,,
and suspended the proposed rate changes for two,months.
Phase I of these consolidated proceedings was established to allow for separate hearing and decision on the legality of the tariff availability restrictions and the cancellation of the firm service to Homestead.
Following a schedule of conferences, evidentiary sub-missions, hearings and briefs, Presiding Administrative Law Judge 'Curtis Wagner issued his Initial Decision on April 21, 1978. He concluded that the proposed availability limita-tions for full and partial -requirements services are just and reasonable,, and approved the cancellation of fi'rm par-tial requirements service to Homestead.
Briefs on exceptions to the Initial Decision were filed -on May 8, 1978, by the Commission Staff, the Cooper-ative group 'of wholesale customers, 2/ and the municipal group of wholesale customers ( the Florida Cities) . 3/ On May 12, 1978, FP&L filed its brief opposing these except'ons.
2/ The Cooperatives include Seminole Electric Cooperative, Clay Electric Cooperative, Lee County Electric Cooperative, Okefenoke Rural Electric Membership Corporation, and Suwannee Valley Electric Cooperative.
3/ The Florida Cities include Fort Pierce, New Smyrna Beach, Homestead, and Starke.
Ik 0 't Docket Nos. ER78-19, et al. 5 By order issued June 1, 1978, the Commission stated its intention to issue a fin~1 decision in Phase I as soon as possible and urged FP&L to refrain from implementing the tariff availability restr ictions and cancellation of requirements service to Homestead, pending a final ruling on these issues. By letter dated June 9, 1978, FP&L informed the Commission that, without waiving its legal rights, it would provide PR service to Homestead and also to the City of Ft. Pierce, Florida, pending final Commission action.
The Rate Chan e Pro osals Firm wholesale service under FP&L schedule SR-2, fried on October 14, 1977, ~ould be available to meet the total capacity and energy require-ments of purchasing, utilities over the indefinite future.
Et is comprised of a two-part demand and energy rate, based on FP&L's average system costs which includes the production costs of its nuclear, gas and oil-fired generating plants.
E ts pr edecessor, schedule SR-1, was made available to all wholesale purchasers within FP&L's servi'ce territory. However, the Company now proposes:;o limit full requirements service to six rural electric cooperatives
.which presently take this service. A potential purchaser recuesting full requirements service from FP&L in the future could not anticipate receiving this service and would not receive the SR-2 rate for any service it was able to arrange
~awhile there will be no abatement of retail sales to new customers, FP&L has stated that it is not willing to commit itself to serve anv new wholesale customers but would be willing to discuss the possibility when the situation arises.
Fp&L wholesale schedule PR, also filed on October 14, 1977, is a modification of schedule SR-1 designed to meet partial power and energy requirements, complementing the purchaser's own generation or other firm power purchases.
Like schedule SR-2, it is composed of a two-part demand and energy rate based on average system costs; however, the rate levels are different and the demand component is stratified to reflect differing prices for peak and base/
intermediate demand. Each tariff has two energy rate blocks, but the SR-2 lower block is attained after purchase of 4/ FP&L brief opposing exceptions at 10.
i/ Id.
.Doc'ket Nos. ER78-19, et al. "6 "75 k(Nh per kN of billing demand, versus 400 kNh under schedule PR. moreover, schedule PR requires the customer s ec'fy its "contract demand" on FP&L for succeeding
'2 month "eriods. The customer's monthly billing demand is never less than 90% of its contract demand plus 75% of its maximum recorded peak demand. Conversely, the demand charge for purchases above '110% of contract demand is higher and the customer may not increase its contr act demand for succeeding 12 month per iods by more than 125% without the consent of FP&L. The Company, asserts that these design differences between schedules PR and SR-2 encourage partial requirements customers to increase their load 'factors.
Partial requirements customers, including the Cities of Homestead and New Smyrna Beach, previously took service under schedule SR-1 which, as noted earlier, was availabLe to all customers in FP&L's service territory. With the filing of schedule PR, however, FP&L proposes to limit this service to three customers, the Keys Electric Cooperative and the Cities of New Smyrna .Beach and Starke.. Homestead which, like Fort Pierce, has sufficient generating capacity to meet its load, would be excluded from this service. 6/
Although not would aid the directly at issue in this clarity of this decision to describe proceeding,, it the four interchange power and energy services which FP&L and several utilities reciprocally provide under bilateral agreements.
he transactions under these agreements are voluntary and of rela ively short duration. Rates are determined at the time of. sale, based on incremental instead of average system costs.
Emergency intercharge service, denominated Schedule A, provides the buyer with capacity and energy in the. event of a forced outage, for a period lasting no longer than 72 hours8.333333e-4 days <br />0.02 hours <br />1.190476e-4 weeks <br />2.7396e-5 months <br />. For pricing purposes, Schedule A service is deemed to be provided by the seller's designated fossil-fired steam or combustion turbine generators and recovers onl'y out-of-pocket energy costs. 7/
6/ As will be discussed later, Fort Pierce began purchasing under schedule PR on Narch 28, 1978. Homestead also continues to receive service by agreement of FP&L. However, FP&L asserts that Commission approves ititswillrateterminate changes.
service to both, if the Jnder certain circumstances, the buyer may alternatively return capacity and energy in kind wi thin the current oi ling per 'od.
Cl O.
Docket Nos. =R78-19, et al. -7" Scheduled interchange-service, Schedule B, provides capacity and energy for periods of less than 12 months, when the buyer is snort .of capacity !rimarily due to forced or scheduled plant outages. The buyer must meet the reserve reguirement associated with. Schedule B service. Delivery of Schedule B power and energy occurs when in the seller's discretion no impairment of fuel stocks or service to other customers would result.
Capacity and energy rates are based on the production costs of the seller's fossil-fired and combustion turbine generating units. Economy interchange service, Schedule C, provides for non-firm energy exchanges of short duration, priced to split the savings between the seller's incremental cost of generation and the buyer's decremental cost. 8/ Finally, firm interchange power, Schedule D, provides capacity and energy- for periods o'f 12 to 36 months. Unlike firm service und'er Schedule SR-2 and PR, this service is curtailable during extreme cold weather and emergency conditions, in which case the demand charge may be .adjusted. Schedule D service is apparently priced at the scheduled outage rate, Schedule 8, for fossil-fueled, and,combustion turbine capacity and energy (Exhibit 29). With intermittant usage Schedule D may be cheaper than, the PR rate; however, it apparently becomes more expensive than Schedule PR as the customer' load factor increases (Tr. 254). FP&L proposes to .provide firm service to Homestead and Fort Pierce only under Schedule D, and has offered them 240 MW of Schedule D capacity through 1980.
The initial Decision The basic issue of this proceeding as characterized by the Presiding Judge is whether FP&T can justify a reclassification of wholesale services based on the lationship of customer load to customer generating capacity.
Xn hearing this case, the Judge imposed the burden of proof on FP&E to demonstrate that its proposed tariff modifications and restrictions were just and reasonable. He largely refrained from considering the evidence presented by Staff and the Florida Cities intended to demonstrate that the proposed restrictions 8/ The price of interchange energy is characteristically determined by FP&I,'s generating units with high operating costs, not by base-loaded nuclear or natural gas-fired units.
0:
Doc(@et Nos. ER78-19, et al. 8 weze oart of an anticompetitive pattern of activities by the Company; leading toward monopolization of the the retail power market.
The Presiding Judge concluded that FP&L's proposed restrictions on eligibility for wholesale services were justified on. the basis of differences in cost of service.
He agreed with the Company that the. load patterns of customers with capacity eaual to their peak demands could be so eratic as to make FP&L system planning unduly difficult, .warranting the complete exclusion, of such customers from wholesale service at average-cost rates.
He d'ecided that. incrementally-priced interchange services, described above, were acceptable alternatives for customers such as Homestead and Fort Pierce. The Judge found that interchange power could be used to meet their base load reauirements "at a lower rate than under the partial reauirements schedule," Initial Decision at 14, and suggested that these self-sufficient utilities could purchase bulk power from., other sources because FP&L has agzeed to wheel. He deferred to civil courts the allegations of these two customers that FP&L had breached contractual obligations to serve them under schedule SR.
The Judge also found that the bifurcation of schedule SR-1 into separate SR-2 and PR schedules was just and reasonable. Horeover, he concluded that the Company could change the availability provision of'ts tariff to limit wholesale services to customers named in schedules SR-2 and PR. This was based on his assessment of certain financial, operational and capacity planning problems asserted by FP&L and his determination that the two-year notice of termination provision in the schedules did not assure that the. Company would recover all capacity costs.
The Judge dismissed the allegations that FP&L' proposals would have an anticompetitive effect, based on a Company representation that it had no interest in acauiring new retail franchises because of fuel problems. Finally, he sought to mitigate concern that FP&L, would strictly construe its tariff limitations by reciting several of the Company's interpretations made during the course of the proceedings, but not added to the proposed'ariffs.
In sum, the Presiding Judge approved each of the Company's pzoposed changes to it wholesale tariff. Based on this, he also that Homestead (and Fort Pierce) become approved the proposal ineligible or serv'ce under FP&L's average-priced wholesale rates and allowed to take firm intercharge service only.
Il Qi Docket Nos. KR78-l9, et al. - 9 positions of the Parties The position of the applicant, FP&L, has been summarized in the .two proceeding sections of tnis opinion. It fur ther states that public utility obligations und'er the Federal Power Act are limited. However, we are basically concerned here with the obligations undertaken by FP&L itself in its schedule SR-1 tariff, which makes wholesale service generally available throughout the Company's .service territory,, in contrast to the proposed limitations on availabili.ty of schedules SR-2 and PR. 9/
Finally, FP&L denies that it has engaged in anticompetitive ac tivit'ies, states that 'Staf f ' and Flor ida Cities are largely irrelevant and questions their'llegations application of the antitrust laws.
Exceptions to th'e Initial Decision raised by Florida Cities are prolix. However, they may be simplified, briefly.
Florida Cities. contend that the proposed tariff is an attempt to abandon service to the City of Homestead because Homestead is currently receiving full interchange service and under the terms cf the proposed rate schedule could no longer receive partial requirements service although it desires to do so. Cities claim 'that restrictions in the proposed. full and partial requirements tariffs are tana-mount to refusals to deal in either total or partial requirements service. FP&L's partial requirements tariff, they assert, is. design'ed to limit the sale of wholesale power. This is accomplished by restructuring the sale of partial requirements service to only those systems which require such service to complement the insufficient genera-ting capacity or firm power purchases to meet their native loads and therefore does not apply to systems which nominally have generation sufficient to meet their loads regardless of the age or efficiency of such generation. Both Homestead and Fort Pierce would be served only at interchange rates, creating a price squeeze.
I 9/ To the extent the Presiding Judge may suggest that schedule SR-l -does not make wholesale service generally available because service contracts may still be required, Initial Decision at 8, this is not reflected in the orovision itself. During cross examination FP&L's rate design witness acknowledged that utilities within tne Company's service territory, such as. Fort Pierce, Jacksonville and Orlando, were eligible for firm service unde the terms of Schedule SR-l. see, infra at 30.
arter all, the purpose of this proceeding has been to limit that provision to certain named and existing customers. a>oreover, FP&L has in the oast filed unexecuted service "agreements" when customers have commenced service.
Cl Oi Docket Sos. r.R78-19, et al. -] p Cities contend that FP&L is attempting to deny or make it more difficult for them to establish economic alternatives. Apart from the tariff proposals at issue, tnis is accomplished by .denying joint participat'ion in new nuclear generation, opposing municipally supported 'legislation, and refusal to file or establish a general rate for trans-mission. They also state that FP&L has refused to support a general integrated power pool in Florida.
he Cooperatives assert in their brief on exceptions that the Initial Decision ignored their position and relied excessively on FP&L testimony. The Cooperatives, which through Seminole are planning base load generating units, will require partial requirements service in the future instead of schedule SR-2 service. Because they are not named in the PR tariff they are not assured of this service, so that these limitations deny them the necessary supply flexibility to account for changing situations.
Staff alleges several acts of monopolization by FP&Z.
Staff states that FP&E has refused to sell wholesale power to the municipal utilities, thereby constituting a refusal to deal proscribed by United States v. Otter Tail Power Coef 331 F. Supp. 54 (D. Nina. 1971), atf'd> 410 U.S. 366 (1973) .
In this regard, it points to an br&toxic FP&L policy,not'.to serve municipal systems at wholesale, an FP&Z, refusal to serve Fort Pierce under the SR-1 tariff, and the limitations on the availability of the SR-2 and PR tariffs presently at issue,. Staff views FP&L's dominance over transmission facilities and its corresponding refusals to wheel as bottleneck monopolization proscribed in United States v. Otter Tail Power Co., sunra. Staff ci'tes examples of FP&L's refusing to wheel thrrd party bulk power to the Cities of Jacksonville, Homestead, and Eake North, and it asserts. that, while FP&L has very recently announced in Docket No. ER77-175 a new policy to permit wheeling, that policy is far too restrictive in terms of rates and terms. Staff sees another example of monopolization in FP&E 's restrictions on access to it's nuclear generating units.
Specifically, Staff asserts that smaller utilities do not have the individual loads to justify a nuclear unit but, due to the economies of such units, utilities may become uncompetitive without access. Staff also alleges that FR&Z, has unreasonably restricted coordination, both in terms of economy exchanges and power pooling. Et then contends that FP&E has established barr'ers to entry in the form of restrictions in its franchise agreements with municipalities, particularly the standard thirty year term. This is occurring, according to Staff, while FP&L maentains a pol'cy o acquiring municipal systems; however,
- P&Z has not acquired another utility in recent years. The Gta'ff concludes that FP&E,'s proposed tariff restrictions would rther i - monopoly "ower in the relevant markets, as ce ined bv its economic witness.
~i Docket Nos. ER78-19, et al.
i THE EX STENCE OF COMP E ~
iT EON AND i~IONOPOLY POWER The Relevant markets We begin our discussion of FP&L's tariff proposals by defining the relevant markets, which "rovide a framework fo'r determining the possible existence of moropo'y power, the opportunities for com-oeti ion and the r.eguired breadth- of any remedial action
~e may order. The Staff economic witness identi iec two broadLy-defined product markets as rele-vant to the investigation of the anticomoetitive effect of FP&L's orooosed tariff restrictions. This analysis was not challenge"'y any party and reflects FP&L' own con-ceptuali-ation of its business. 10/. The retail market involves sales of caoacity and energy to ultimate consumers by ver tically integrated utilities such as FP&L and by distribution utilities. The bulk power market involves sales of wholesale power and energy to retail distributors (includ'ng the captive retail distribution centers of'vertically-integrated systems) by bulk power producers and suppliers.
These product market definitions are amply supported bv the record, and we adoot them in our analysis.
The bulk oower oroduct market was further disaggregated by the Staff witness into five subnarkets essentially consisting of full reauirements power, partial reguirements and coordination services, component bulk services, sales at transmission vol-tages to ultimate consumers and transmission services.
in so doing he attemoted to demonstrate the inter-cnanaeability of firm full reauirements power with "unbundled" bulk oower services which may be purchased from several sources to meet the reauirements of a retail distr ibutor, in conjunction with generation owned by that distributor.
While we ao not disoute the validity of tnis subdivision of the wholesale market, a more practical method of analyzing that market for purposes of this proceeding is to separate bulk power transactions into, discrete .firm reauirements and coordination submarkets. Essentially, this oarallels the distinction between FP&L's schedule SR-2 and PR firm services on the one hand .and its interchange services on tne other. FP&L's firm services are non-interruotible; priced on the basis of averaae system costs; designed to meet a 10/ in a 1976 oresentation to the Company's Senior Management Council, FP&L' v'ce president for strategic planning sub-divided the Comoany's activities into discrete bulk powe anc electric service businesses (Exhibit G:-3, at 3).
0 Ot I
~
Docket Nos. ER78-19, et al.
customer's base, intermediate and/or peak load requirements; and continuously available over the indefinite future. Con-versely, interchange services are interruptible; incrementally priced on the basis of oil-fired generation costs; ancillary to bulk power supply and not practicable sources of base load power; and of limited duration. Depending on the feasibility to the customer of self-generation or supplementary firm-power purchases, partial requirements service is reasonably inter-changeable with full requirements power to meet a retail load.
Such interchangeability is a requisite for grouping products in a common market. See, .United States v. du Pont &
Co., 351 U.S.. 377, 393 ( 1956). Of couxse, PP&L did not at&elf distinguish between these two firm services in its SR-1 schedule prior to this case. However,'nterchange services cannot be used to sustain load requirements and may only be used to augment other primary sources of bulk supply.
ln particular, FPsL's wholesale customers do not regard Schedule D firm power as interchangeable with SR or PR firm power and the Company describes them as different services.
FP&L sells electric power and energy to most of the heavily populated areas along the eastern and lower western coasts of peninsular Florida and portions of central and north-central Florida. Within or adjacent to this. service terr itory are 22 smaller areas served by municipal and coop-erative utilities. The Staff witness identified this composite area, comprised of some 35 Florida counties, as the relevant geographic market for both retail and wholesale product markets. This was primarilv determined from information in FPGL'. 1975 annual report. The service territories of larger bordering utilities ll/ were excluded from the retail geographic market because of the unavailability of wheeling service into the FP&L service territory and the existence of retail territorial allocation- agreements with FP&L which prohibit retail competition (Exhibit GT-6, at 8-9). 12/ This is not to say that competition does not exist in the, relevant retail market. As we discuss later, there is significant competition, primarily franchise and yardstick competition, 11/ Florida Power Corporation and Tampa Electric Company.
12/ These retail territorial agreements are not at issue in this proceeding and we express no opinion as to their merit. They require approval by the F'orida Public Service Commission and have been uPheld. on judicial review. Storev v. Navo, 217 So. 2d 304 (Pla. 1968), cert. den., 395 U.S. 909 (1969) . In 1974 this authorrty was exPxessly given tc the Florida Commission. See, Florida Statutes Annotated 5366.04.
0 Docket Nos. ER78-19, et al.
and FP&L itself has recognized that its neighboring utilities are both customers and competitors (Exhibit GT-6, at 1) .
Furthermore, even territorial allocation agreements are subject to modification under limited circumstances in pro-ceedings be for e the Florida Public Service Commission.
Peoples Gas System v. )(aeon, 187 So. 2d 335 ( Fla. 1966) .
The wholesale bulk power geographic market was similarly constrained because relatively few wholesale transactions are made across its boundaries. This geographic limitation applies as well to the bulk power submarkets, particularly the firm requirements submarket, described ~su ra, because of wholesale territorial agreements and the, absence of firm power transmission services. Although there is a potential for competition in the wholesale market, actual competition has been inhibited by Fp&LF as we discuss below. We are not required to remedy that situation now. This 'opinion reflects our concern that wholesale monopoly power not be used to maintain or enhance a utility's retail market position.
Monor)olv Power Monopoly power has been defined 'as the ability to control prices or exclude competition from a relevant market. United States v. Aluminum Co. of America, 148 F.2d 416 (2d. Car. 1945). Zt may be readrly apparent in cases where prices have been controlled or competition demonstrably excluded; however, such showings. are not essen-tial. American Tobacco Co. v. United States, 328 U.S. 781
- E on a firm's share of the market, and a predominant share warrants the inference of monopoly power. United States v.
Grinnell Cor~.F 384 U.S. 563, 571 (1966). ln United States v.
Otter Tail Power Co., 331 F. SUPP..54 (U. Ninn. 1971), aff'6, 410 U.S. 366 (1973), an inference of monopoly power was based on a f inding that the defendant utility possessed a '75 ..6%
share of the relevant market. We find that FP&L has monopoly power in these relevant markets, as determined by Dr.. Taylor in unrebutted testimony.
Based on 1976 data, FP&L has been shown to possess a 76%
share of the retail market in terms of customers served.
Its closest rivals are the eight municipal utilities located within FP&L's service territory which generate a portion of their power requirements. 14/ Collectively, these eight 13/ Monopoly power can be exercised as well through subtle efforts to prevent competition from developing. United Stat s v. Griffith Amusement Co., 334 U.S. 100 (1948) .
The eight utilities are Florida Public Utilities in Fernanaino, Fort Pierce Utilities Authority, the City of Homestead, Jacksonville Electric Authority, City of Key West, Lake Worth Utilities, the City of New Smyrna Beach and the City of Star ke ( Exhibit GT;-5 ) .
0 Ol Docket Nos. E378-19, et al.
systems have a 12% share of retail customers served (Exhi-bi t GT-3). In 1976 FP&L's share of total kilowatthours sold at retail was 758, compared to the collective 13% sold by the eight generating municipals. 15/
The statistical measurement of monopoly power adopted
'n United States v. Otter Tail Power Cora suora, was the percentage of towns served at retail wrthin the .relevant market. FP&L provides retail service to approximately 90%
of the communities in the relevant market .with populations of over 1000 people (Tr. 1569) . 16/
The inference of FP&L's monopoly power in the retail
- market is strengthene'd by several additional considerations.
First, the existence of'erritorial allocations obviously provides a very effective barrier to new retail competition from existing utilities. Second, the substantial cost of accuiring utility property at the expiration of an existing supplier's franchise could be a barrier to competition for existing firms and new entrants as well (Exhibit S -8) . Third, the absence of wheeling services that would allow a utility to provide retail service to a noncontiguous area would stop any retail competition which overcame the first two barriers. 17/ In sum, these high market entry barriers confirm. the inference of monopoly power based on 15/ FP&L's share of the relevant market has grown some-what between 1966 and 1976 from 73% to 76% of total retail customers and from 74% to 75% of retail sales (Tr. 1568) .
16/ Cf., Brown Shoe Co. v. United States, 370 U.S. 294, 337 (1962), a case brought under g7 of the Clayton Act where monopoly power was measured on the basis of cities in the. relevant market with populations exceeding 10,000. In City of Kfishawaka v. American Electric Power Co., 465 F. Supp. 1320, 1325 (N.D. Ind . 1979),
tne court found monopoly power where the defendant served at retail 89% of the mun'icipalities in the relevant market.
17/ Cf., Boston Edison Co., Docket Nos. E-8187 and E-8700, Order Reversing in Part and Affirming in Part Initial Decision, m'meo at 3 (December 7, 1976), where the Commission dealt with a transmission rate for retail service to a noncont'guous terr'ory.
II Docket Vos. ER78-19, et al. 15 F'P&L' market share. Consumers Power Com an, 6 NRC 892, 1013 (1977) . Moreover, entry barriers enhance the opportu-nities for exploitation of this power.
Although the record does not contain precise indicia of FP&L' share of the wholesale power market, it is statistical clear that the Company has monopoly power over bulk power transactions as well. FP&L's share of the retail market is a suitable .base on which to assess its,share of the wholesale market, because the bulk power which the Company produces to serve its own captive retail service territory must be included as part of the wholesale market. United States v. Aluminum Co.
of Anetica, ~su ta, 148 F.2d at 424. Ttus, FF&L possesses at least a 75% share of the wholesale market, to which must be added the Company"s utilities within the wholesale sales to municipal and cooperative relevant market. The only other supplier of wholesale requirements service within the relevant market is the Jacksonville Electric Authority which supplies its own distribution system, plus the distribution utilities
. in Jacksonville Beach and Green Cove Springs.
Moreover', included in FP&L's bulk power resources are virtually all of the nuclear generating capacity and sub-stantially all of the gas-fired generation
'the relevant market, each of which give the available within Company a signi-ficant. edge in the production of low-cost power for base load requirements. Three .of the four operating nuclear plants in, the State of Florida are solely owned by FP&L (Tr. '588, 1625) . 18/ Only New Smyrna Beach and the Cooperatives, acting through their generation and transmission subsidiary, have gained direct access to nuclear generation, through small ownership interests in Florida Power Corporation' nuclear plant. The Company does not dispute that its long-term, noncurtailable supply of natural gas gives it it an advantage over municipal generating systems; 19/
however, asserts that it this bargained-for advantage for sales to existingretain should be allowed to customers (Tr. 205). By comparison, municipal generating units are small-capacity, oil-fired steam or internal combustion machines 18/ See, Fort Pierce Utilities Authorit v. Nuclear Re ulatorv Commission, F.2d , D.C. Cir. Nos. 77-1923 and'77-2101 (March 23, 1979).
'9/ See aenerallv, Sebrina Utilities Commission v. FERC, F.2d , 5th Cir. Nos. 77-2911 and 77-2972 (March 20, 1979) .
Cl li Docket Nos. ER78-19, et, al. 16 which characteristically have high operating costs and are ill-suited to provide baseload requirements. 20/
Finally, we note that FP&L owns 81'4 of the transmission lines within the relevant market with operating voltages of 69 kV or above. The Jacksonville Electric Authority owns the next-largest share, '5S (Exhibit GT-5). These are the facilities over which bulk power is transported within the relevant market and FP&L's ownership share gives "strategic dominance" over transmission. United States v.
it Otter Tail Power Co., sunra, 331 P. Supp. at 60.
As noted above, FP&L did not undertake to define relevant markets,,and did not challenge, the analysis of Staff's economic witness. Instead, its economic policy witness challenged the basic relevance of structural analysis to regulated public utilities. The Company's thesis is that regulation prevents a utility haying monopoly power from controlling prices and excluding competition from the market, i.e.,
the indicia of monopolization under Section 2 of the Sherman Act. 21/ However, this is not really a rebuttal to Staff's positron. Instead, it simply confirms the role of the Commission in eliminating or modifying rate provisions, desi ned b a utilit, which would otherwise facilitate price control or exclusion of competitors. 22/ We believe the idea that regulated utilities are immune from charges based on the exercise of monopoly power has been thoroughly discre-dited by United States v. Otter Tail Power Co., ~su ra.
ACTIONS OF COMPETING UTILITIES WITHIN THE RELEVANT MARKETS Introduction In cases where the anticompetitive effects of wholesale rate schedules are at issue, we anti-cipate focusing primarily on structural analysis to measure the existence of monopoly power, and on the, suspect rate provisions themselves to determine their effects on the 20/ Florida Cities'ri'ef on exceptions at '76-77. See, Exhibits 28 (REB-C) and 41 (JW-1, at 3-4).
21/ FP&L brief opposing, exceptions at 43.
22/ Clearly, regulation does not insulate electric from operation of the antitrust laws.
utilities Cantor v. Detroit Fdison Co., 428 U.S. 579 (1976); see, Consumers Power
- 2. Nor zs thxs Commi.anion Precluded from considering antitrust law and policy. Gulf States Utilities Co Docket No.
ER76-816, Order Approving Settlement Subject to Cond-ition (October 20, 1978) .
Ie Docket Nos. ZR78-19, et al.
enhancement or maintenance rate provision of monopoly power.
would weaken If, competitor for example, a a or raise the entry barriers to a market where competi-tion can exist, that will likely be sufficient evidence of anticompetitive effect to warrant its elimination or modif ication absent a weightier showing that the provision serves some countervailing public interest.
Cit of Huntin bur v. FPC, 498 F.2d 778 (D.C. Cir.
1974); Northern Natural Gas Co. v. FPC, 399 F.2d 953, 971 (D.C. Car. 1968). 23 Unlike presentations in civil, and criminal actions to enforce the antitrust laws, it is not necessary in our deliberations to. have an, extensive record on the past conduct of a utility towards its customers, or its intent in establishing or maintaining a restrictive rate provi-sion. See, Mi'ssouri Power & Li ht Comaan , Opinion No.
31, mimeo at 9-10 (October 27, 1978) . 24 Every rate case in which anticompetitive effects are alleged need not become a full-blown antitrust proceeding.
23/ In rate change proceedings such as this one, heard under Section 205 of the Federal Power Act, the appli-cant bears the ultimate burden of nonpersuasion.
However, Staff and intervenors may be required to come forward with some evidence to focus their allegations of anticompetitive, effect, and to relate that evidence to the targeted rate provi-sion. See, Northern California Power A encv v.
FPC, 514 F.2d 184 (D.C. Car. 1975).
24/ However, there may be si*tuations in which the rate proponent may demonstrate the innocuity
., ~1 of a questioned provision because, for example the utility has a general wheeling tariff, P
or undertaken
' other actions which weaken 1 ly Power Pool, Opinion No. 775, mimeo at 33 (September 10, 1976), aff'd sub. nom., Municinalities of Groton, et al. v. PRRC, 587 P 2d 129.6 (D.C.
Car. 1978).
~I 0 Docke t adios . ZR7 8-19, et al . 18 However, as noted sunra, at 2, conduct may be relevant to our assessment of the justification for and purpose of a service limitation. Zn the case before us a ull record has been compiled and we are further aided by a recent decision of the- Court of Appeals for'he Fifth Circuit 25/ in fully understanding the anticompetitive effects of FP&L's rate proposals. 26/
Moreover, the documentary evidence of Staff and the Cities, largely obtained from Company files, is frequently incongruous with the testimony of Company witnesses. 27/ By and large the testimony of witnesses presented by Staff .and the Cities is a summary recapitulation of hundreds of pages of correspondence and internal company documents contained in over 200 exhibits.
This evidence,has been of significant assistance in probing the effects of FP&L's alleged need to restrict the availability of service under schedules SR-2 and PR.
The Company's reaction to the voluminous evidence of the Cities and the Staff relating to anticompetitive conduct is essentially, a demurrer. FP&L asserts that this evidence is irrelevant to its proposed tariff modifications and that issues of anticompetitive conduct should be raised in other forums. While we agree that the Commission has no authority to enforce the antitrust laws, this does not make the evidence irrelevant to the formulation of remedies well within our authority. 28/
25/ Gainesville Utilities Denar tment v. FLorida Power &
H.S. , 99 S. Ct. 454 (1978). Thxs opinion was issued after Judge Wagner wrote his Initial Deci-sion.
26/ This evidence confirms our conclusion that FP&L has monopoly power in the relevant markets. Judge Wagner was -also concerned by what he characterizejd as "disturb-ing episodes of Florida Power & Light Company's past conduct which raise serious antitrust questions."
initial Decision. at 5. However, time constraints led him to defer to the Commission or the Justice Depar tmen t.
27/ See, Gainesville Utilities Department v. Florida Power t.iaht Co., sunra, 573 9. 2d at 301, note 14.
28/ Federal Power Commission v. Conwav Co re., 426 U.S.
271 (1976); Cs tv of Pittsburg v. FPCf 237 F 2d 741, ~
75K (D.C. Cir. 1956); Pacific Gas and Electric Co.,
FPC Project Nos. 1988 and 2735, mimeo at 10-13, order of April 1, 1976.
19 Docket Dos. ER78-19, et al.
lvholesale Market Division. FP&I has been found
.to have engaged in a oer se violation of the Sherman Act bv conspiring with Florida Power Corporation to divide the Florida wholesale power market. In Gaines-ville Utilities Department v. Florida Power & Light Comoanv, 29/ the United States Court of Appeal for the Fif"h Circuit reversed and remanded a district court judgment, based on a review of the evidence which "com-pelled" a finding that the two largest utilities in the State of Florida had conspired to avoid selling wholesale power to customers in each other 's service terr itor ies. 30/
~
This case arose from efforts by the Gainesville, Florida, municipal utility system to end its costly operat'on in isolation by interconnecting with either FLP & I, or Flor ida Power Cor'p. 31/ The Cour t found that beginning in 1965 Gainesville's efforts to interconnect and coordinate its operations were met with a joint strategy to induce the municipal to interconnect with Florida Power Corp., on precondition that all three systems agree to -a retail territorial allocation.
Correspondence sent to Gainesville and to the Federal Power Commission,,regarding an interconnection applica-tion under Section 202(b) of'he Federal Power Act, was routinely passed between FP&I, and. Florida Power Corp. with the understanding that concerted action was contemplated and invited. 32/
29/ Suora, note 24. The record in. this ca e contains a number of exhibits from that antitrust proceeding.
30/ Gainesville Uti'lities De artment v. Florida Power ville and Florida Power Corp. reached a settlement before the action was tried.
31/ 'See, Gainesville Utilities Department v. Florida Power Corporation, 40 F?C 1227 (1968), reversed, 425 F.2d 1196 (5th Cir. 1970), reversed, 402 U.S.
515 (1971).
32/ See also the consent decree in United States v.
Florida Power Cora. and Tampa Electric Co. (1971 T"ade Cases para. 71, 637, H.D. Fla. 1970).
4l I
Docket 'Aos..ER78-19, et al.
The court was. par t'cularly impressed by the documen-tarv evidence which demonstra'ted a "routine" course of conduct spanning two decades whereby each utility would refuse to sell power to existing wholesale customers of the other or to municipalities served at retail by the other which were attempting to establish new distribution utilities. On remand, the c'ase determination is once again before the district court for precise of the effect of the wholesale territorial- allocation on Gainesville's difficulty in obtaining an interconnection, plus attendant damages. Until the trial court enters its new judgment, we shall not know how FP&L is. to be enjoined from engaging in anticompetitive conduct agai'nst municipal utilities or directed to remedy the damage done.
~
Ac uisition Efforts and Franchise Competition The principal allegation leveled against FP&L's tariff limita-tions is that by restricting access to wholesale power the Company may thereby increase its dominance as a retail supplier. The record is richly detailed with evidence of retail competition to serve entire communities between FP&L and existing municipal systems.
FP&L s f ir st attempt to acquire 'the f ake Worth util-ity is documented in a letter to FP&L employees from the Company's West Palm Beach Division Manager, dated June 18, 1958, which sought "a list of your relatives and fr iends who live in Lake Worth." The Distr ict Manager proposed to send these sympathetic members of the community infor-mation concerning a forthcoming election, on a proposed 30-year lease of the municipal system to FP&f., where a successful vote would "a'ssist us in our negotiations for o ther municipal systems" ( Exhibit GT-34, at 64') . Liter-ature distributed to Lake Worth voters promised better service and an immediate rate reduction, averaging 20%, plus
, an aggregate reduction of $ 14 million over the 30-year lease. Although winning a simple majority vote, the elec-tion failed to attract the requisite 60% voter participa-tion and the proposition failed. Efforts were renewed in 1968 through a Lake Worth property owner; however, preliminary discussions were terminated without action.
FP&f. offered to furnish firm power to the Hew Smyrna Beach municipal utility dur ing the winter of 1958, provided tne City Commission would agree not to order any additional generating equipment and enact an ordinance which would permit disposition of its electric utility on a majority
41 ~I Docket Nos. ER78-19, et al.
vote. 33/ FP&L then planned to negotiate a lease of the utility the following spring and submit it to the voters for approval (Exhibit GT-34) . An Apri.l 1959 report to Company management stated that the proposed acquisition "certainly provides some distinct advantages other than just taking over a municipally owned property." The report noted the considerable possibilities of industrial and residential development in the, area (Exhibit GT-34, at 73).
The Company's action in 1959 did not win it a lease of the, New Smyrna Be'ach system (Exhibit GT-34., at 61);
however, -FP&L tried again in 1965, sending an inquiry to the City Commission which was virtually identical to the letter sent to Fort Pierce in Nay of that year (Exhibit GT-34, at 75) . 34/ FP&L Executive Uice President R. C.
Puller ton descr xEed the prospect of taking over the New Smyrna Beach muni'cipal system to the chairman of another
.investor-owned utility as something the Company viewed "with natural enthusiasm" (Exhibit GT-34, at 75). Also in 1965, FP&L. purchased from New Smyrna Beach all of its electric utility facilities in the City of Edgewater where a
it had previously provided retail service to only portion of the community.
Intermittent negotiations occurred between FP&L and New Smyrna Beach in 1970 and 1973.. In 1974, the Company devised an internal plan for acquiring the municipal utility (Exhibit GT-34, at 32), and sent senior manage-ment representatives to discuss an. aequi;sition proposal with the city utility commission, estimating,a rate reduction of more than $ 600,000 under FP&L ownership.
Company management informed the utility.commissioners that FP&L could provide cheaper and more dependable service because of its greater power plant capacity and 33/ Characteristically, Florida municipal charters reauire the approval of greater .than simple majority of voters for disposition of local utilities. Similar terms were extracted from the City of Clewiston in 1965.
See, the initial decision in Florida Power & Light Co., 37 ."-.P.C. 560; 573, adooted, 37 FPC 544 (3967),
affirmed sub nom., Federal Power Commission v.
Florida Power & Light Co., 404 U.S. 453 ~1972).
34/ :nfra, a" 22.
lg.
Docket Nos. ER7S-19, et, al.
i"s diversitv of fuels (Exhibit;CT-34, at 34). Another acquisition presentation .was made to the utility commis-sion in 1975, at the City's request.
FP&L sought to acquire the Fort Pierce utility in 1965 when the subject was raised by a city commissioner at a meeting convened. to discuss a possible interconnec-tion of the two systems (Exhibit GT-59). The response o the Company' division manager mentioned the inter-connection only as an interim arrangement, concentrating instead on the sale or lease of the municipal utility.
FP&L stated that any lease should be for a period of 30-years to coincide with the term of a standard electric franchise. In return, the Company offered to immediately in'terconnect the systems, apply FP&L's, lower retail rates and "lend its full support toward attracting industry to the area." Fort Pierce thereafter invited lease or sale proposals-; however, negotiations stopped short of acqui-sition.
Acquisition was again raised by Fort, Pierce officials in March of 1976. The minutes of a meeting, with FP&L senior management officials record that the City felt that disposition of 'its utility system was necessitated by an inability to exploit the economies of scale in electri-city production:
Mr. Skinner (-Fort Pierce's Chief Engineer]
said we think its very efficiently oper-ated. We realize the big problem facing us is not the high cost of fuel or the inefficiency of our system, but the ineffi-ciency as compared with putting oil into a larger boiler and turbine. 'That's where we'e getting caught short on the heat rate input to the boiler. We have a problem compe ting. with FP &L f avorably today because
. it represents around 65% roughly of the cost of doing business., the cost for fuel oil. (Exhibit GT-31.)
When Fort Pierce inquired't that same meeting about the purchase of, 30 MN of base-load firm power, the Company responded that it did not, wish to sell firm power unless the purchaser could reciprocate with sales of firm power to the Company. This would requir Fort Pierce to main-tain generating capacity su ficient to meet its own load.
FP & L also di scour aged purchase under the SR-1 schedule,
0 23 Oocyte't <os. ER78-19, et al.
indicating that it was not really firm and "awfully expensive" (Exhibit GT-31, at 17).
The Comoany continued to develop an acquisition pro-
"osed throughout 1976 (Exhibit GT-34) . However, enthu-s'asm was apparently dampened when Fort Pierce inter-vened in proceedings before the Nuclear Regulatory Commission regarding FP&L's proposed 'South Dade nuclear
=
generator.
FP&L proposed a sale or lease of. the .,Homestead 1976 when its president met with city offi-utilityto indiscuss cials Homestead's request for a retail ter-ri,tor,ial agreement, an emergency interconnection and wholesale purchases (Exhibit G -18, at 1).. In 1976 the Homestead City Council discussed the topic with FP&L; however, negotiations were apparently not continued.
The record indicates that acquisition of the Vero Beach util'ity was considered by FP&L in 1957, 1958 and 1959. 35/ Thereafter, a ser ious effort to acquire the Vero Beach system was undertaken in 1976 which culmi-nated in approval of the sale by the City electorate and an application to the Federal Power Commission under Section., 203 of..the Federal Power Act. Internal management correspondence concerning implementation of the acquisition by FP&L suggests that Vero Beach would be viewed as a bellwether by other municipals thinking of entering or leaving the utility business:
The impact potential of 'the Vero Beach acquisition on the franchise election in Daytona Beach and other Municipal operations such as Ft.
Pierce, Homestead, etc. makes zt imperative that we not under..achieve with our Vero Beach operation. (Emphasis supplied.) 36/
After hearings in Docket No. E-9574, the Vero Beach acquisi'tion was approved by an administrative law judge on grounds, advocated by FP&L, that the municipal utility could no longer efficiently generate its own power require-ments and that FP&L would provide an economic source of reta'1 supplv for the citizens of Vero Beach. This con-35/ Exhibii s GT-34, at 74; GT-52; and GT-62.
36/ Staff Exhibit GT 34, at 1.
0 I.
Docket Nos. ER78-19, et al " 24 trasts with the finding by the Presiding Judge that Vero Beach was a "trulv excellent" utility with outstanding growth potential. See, Florida Power & Light Co., Docket V<o. E-9574, Initial Ruling and Order on Phases, I and II
( February 6, 1978) . However, FP&L thereaf ter withdrew its application in early 1978 prior to the commencement of a final phase of the acquisition proceeding which was to consider. the possible anticompetitive effects of the proposal.
In summary, the record documents 20 years'orth of franchise competition between FP&L and the municipal utilities located within its service territory. At various times FP&L has promoted acquisition or willingly received municipal proposals. Roost, if not all, of those incidents occurred when the municipal systems were arranging new bulk power supplies from the options of self-generation, wholesale .purchase from FP&L, and retail purchase from FP&L after franchise disposition.
The Company has not succeeded in many acquisitions, because the municipal candidates solved their supply problems by adding generation. However, the record strongly indicates that self-generation is becoming less and less attractive to the point where FP&L's witness Gerber has described small scale generation as an anachronism. Since FP&L controls the remaining two options, 37/ we conclude that its wholesale monopoly power can only increase, and, thereafter, its retail power as well. See, Borou h of Ellwood Cit v.
Penns lvania Power Co , 462 F. Supp. 1343, 1346 (H.D.
Pa. 1979).
The Presiding Judge expressly accepted the Company's representation that it was not, interested in acquiring Homestead or Fort Pierce because of capacity problems and oper'ating difficulties. Since we find the premise of this representation unconvincing, 38/ we would be remiss to wholeheartedly accept its conclusion. In any event, it does not overcome the weight of the evidence to the contrary. 39/
37/ As discussed .infra, at 31, municipal purchase of entitlements in large generating units constructed by FP&L does not currently appear to be a viable option.
38/ jnfra at 34-37.
39/ Alternatively, Commission could itrequire appears that the Florida. Public Service FP&L to provide retail service if theoperat'ons.
customers of a mun'cipal utility voted to dis-Florida Statutes Annotated, band See, 5366.03.
0 II Docke Nos. ER78-19, .et al.
Potential Losses of Franchises The Company appears well aware of the re1ationship between its wholesale sales to municipal utilities and its ability to retain existing retail franchises. En March of 1977, a market development presentation was made to rp&L management which stressed, inter alia, the need to maintain the integrity of the Company in relation to publicly financed utilities (Exhibit GT-64). 40/ Between 1976 and 1985, for example, franchises. covering retail sales .to 41. 8% of FP & ' E customers, are to expire (Exhibit GT-66) . In addition, Fp&L serves another 93 communities at retail with no franchise agreement. Franchise competition can be a positive force to encourage better service and lower rates,; thus, a utility should not be allowed to tilt the balance by artificially making wholesale service unattractive to potential retail market entrants. United States v. Otter Tail Power Co.,
suora, 331 f. Supe. at 61., The record contarns evidence relatino to three franchise erpirations, of which Daytona Beach is the most ful'y documented.
In 1975 or 1976, the -City of Daytona Beach under-took a study of municipal distribution. versus FP&L franchise renewal. In response, the Company mounted a significant effort to inform City residents of the benefits of franchise renewal. Of particular note are the Company's statements that each of the Florida municipal utilities had rates higher than FP&E (except for two with access to hydroelectric power) and that municipals charge these higher rates because FP&L "can gain greater economies of scale in all facets of its opera-tion" (,Exhibit ST-5, at 1 and 3) . FP&L won renewal 4O/ In a 1975 paper on "Strategic Essues In Enter-utility Relations" prepared by Company witness Gardner, emph'asia was placed, inter alia, on franchise renewals and phase out of wholesale tariffs (Exhibit GT-30) . See also, Exhibit GT-49.
5 Docket Nos. =R78-19, et al. 26 of its franchise after a record high election expendi-ture (Exnibit GT-76). Due to the continuing expirations of retail franchises, we conclude that vigorous franchise competition exists, within the retail -.market which FP&L
-can 'nfluence through its wholesale sales policies.
The Company characterizes its efforts to renew franchises and acquire others as sales promotion and business preservation. 41/ However, these actions may still run afoul of antitrust law, and policy when undertaken by a possessor of monopoly power.. Otter Tail Power Co. v. United States, 410 U.S. 366 (1973); and Catv of Nishawaka v. American 'Electric Power Co.,
465 F. Supp. 1320, 1329-32 (N.D. Ind. 1979).
FP&L's Relationshi with Homestead Traditionally, FP&L has demonstrated considerable reluctance to engage in firm power transactions with municipal utilities, even within its own service territory.. During the 1950's and 1960's this amounted to an unqualified refusal.
Rate schedule RC under which firm service was provided to. cooperatives required that capac ity and energy "not be resold 'or distributed by the Customer to any munici-pality or unincorporated community for resale" (Exhibit GT-51). In an initial decision adopted by the FPC in Flor ida Power & Li ht Co., 37 FPC 544 (1967), 42/
Hear ing Examiner Wenner recounted six separate instances over a period of 13 years when the Clewiston municipal utility requested and was refused wholesale service by FP&L. 43/ In 1963, the Company's presid'ent informed the City of Winter Garden that FP&L, did'ot "supply 41/, FP&L brief on exceptions at 45.
42/ Affirmed, Federal Power Commission. v. Florida Power & Light Co., 404 U.S. 453 (.1972).
43/ 37 FPC at 572-73.
~ i
Docket Nos. ER78-19, et al. 27
...un.'c'al systems f irm wholesale power for distr ibution through a municipal distribution system" (Exhibit GT-
'6) . 44/
Homestead first requested firm wholesale service from FP&L in '967, to which the Company responded that it did not provide this service to municipalities and c'c not wish to serve any. Wholesale power from FP&L was Homestead's alternative =to the immediate installa-tion of new generation or disposition of its system (Exhibit GT-22). Robert Fite, the Company's. president, and F.E. Autrey, a vice president, stated that FP&L would not refuse to sell, wholesale power, if that was the only arrangement negotiable; however, they added that the City would not receive the rate at which firm sales were made to cooperatives and that a retail territorial allocation was a necessary precondition to any service. FP&L emphasized the comparative benefits of an emergency interchange-agreement or sale of the municipal system in lieu of wholesale purchases (Exhibit GT-18) . Homestead was unable to negotiate a firm wholesale contract and instead made inte'rmittent purchases .from FP&L over the ensuing five years at average prices that were considerably higher than those paid by FP&L' cooperative'ustomers (Exhibit GT-29, at 33) .
In April of 1972, Homestead requested a more sophisticated interchange agreement with FP&L including the ourchase of firm power to meet a portion of the City's load;,. however,, FP&L negotiators responded that FP&L was only interested in an interchange where both parties had capacity to meet their own demands plus ample reserves (Exhibit GT-29, at 1-3) . Instead, Homestead and FP&L entered into new emergency service agreements whereby the Company only agreed to supply emergency power needs "to the extent it has capacity available...." FP&L applied its then-existing rate schedule "WH," applicable to total requirements our-chases by cooperative customers (Exhibit GT-29, at 4-ll).
Homestead next requested power from FP&L in August o 1973, proposing a firm purchase of 12-16 HW from 197S hrough 1980. The City stated that it intended to use 44/ See also, Gainesville Utilities L'ci c Co, suer',
Denartment v. Florica
>owe S 573. F 2d at 298.
(Qi iS Docket Nos. ER78-l9, et. al. 28 this capacity for base load, purchase interchange energy to meet its intermediate load and use its own generation only for peak load capacity and reserve (Exhibit GT-29, at 12). 45/
The Company first decided to respond to Homestead's request with the so-called "Narshall Theory": Homestead was to be told that FP&L had no firm power to sell.
Company negotiators. were advised to have load and re-serve estimates available to substantiate this response (Exhibit GT-29, at 14)' Immediately thereaf ter, however, the Company concluded that Homestead had been listed as a customer under all requirements schedule SR and was actually receiving firm power at committed. intervals. 46/
FP&L then decided that if Homestead requested a 'trans-mission interchange agreement as well as firm power, it would employ Schedule D and use Schedule SR as the nego-tiated rate thereunder.
In October of 1973, Homestead submitted a compre-hensive request for an interchange agreement and simul-taneous'urchase of firm power from FP&L to serve the base-load portion of the City's requirements (Exhibit GT-29, at 24-28). However, .Exhibit GT-29 (at 29'-31) reveals that the Company wanted to avoid any obligation to sell firm power to Homestead by withdrawing schedule SR from its existing wholesale customers, including Home-stead and replacing it with an "Emergency Rate Schedule" telling the City that it has no firm power to sell.
45/ The Company's chief representative at this meeting was its vice president, E. L. Bivans, who later testified in this proceeding. Copies of Bivan's notes (Exhibit .GT-29,: at 12) were sent to the Com-pany's president and other executives.
46/ This discussion is recounted in the notes of Com-pany employee "NHE" (apparently W.H. Klein, a nego-tiator in dealings with Homestead),, Exhibit GT-29, at 15. The notes bespeak a certain surprise in learning that Homestead was an SR customer: "Rate SR offers firm power. Apparently, the Company has been honoring their request for a number of years, and is not in a good position to refuse to continue offering firm base load power of 12 NVi to 14 6&7, which is consistent to (sic] their previous demands."
I+I Docket 'Nos. ZR78-.3.9, et, al.
Alternatively, it considered offering Homestead a
.Scnedule D ( f irm interchange)
. rate lower than schedule SP in return for a signed contract stating that the City would install additional generation capable of carrying its electrical load. The final paragraph of this internal memorandum seems an apt summarization of FP&Leaction to Homestead ' request for firm power:
It is our belief that if we refuse to sell the City of Homestead Firm Power they will immediately request
'us to wheel from other municipalities.
If we .encourage them to increase their generation where can purchase we power from them, we may offset- the demand for wheeling as well as avoid a long-term Firm Power commitment. (Exhibit GT-29, at 31.)
FP&L's hope to induce Homestead to construct addi-tional generation for base load requirements in lieu of firm power purchase was not done without knowledge of the consequences for the City. In December of 1973, FP&L's financial planning department prepared an analysis of FP&L and the municipalities in or near its service area entitled "Comparative Analysis of Municipal and Investor Owned Utilities and the Benefits to Their Customers" (Exhibit GT-34, at 42-44) . This study determined that, except for Orlando and Jacksonville, municipal utilities charged higher retail rates than FP &L, because:
The size of most municipal units is limited by the. size of the city. This limit on size prevents the smal'ler muni-cipal utilities from realizing many of the economies of scale available to large utilities. This fact was clearly revealed in the analysis. The smaller utilities had less efficient heat rates and higher fuel and operating costs per KWH of. power sold. These higher costs appeared to be major contributing factors in the high-cost of power to their customers.
Negotiations on the Homestead interchange agreement continued and in December of 1973 a final set of discus-sions occurred, from which FP&L "learned that the
Jl <Qi Docket Nos. >>R78-19, et al. 30 "key" to this agreeement was FP&L's willingness to simultaneously supply service under, both the interchange agreement and schedule SR after construction of neces-sary interconnection facilities by Homestead. Engin-eer ing and billing problems were not considered serious bv FP&L personnel.
- However, Company negotiators opposed a written commitment to serve the City under Schedule SR af ter completion of the interconnection "because we [FP&L]
already have a contract to serve them on SR and the agree-ment does not necessarily prohibit such an arrangement to .continue" (Exhibit GT-29, at 39). Instead, FP&L's v'ce president, R. G. Mulholland did send a letter to Homestead' City Manager, in January of 1974, after the interchange agreement was signed, stating the Company's understanding that it would provide Homestead, with elec-tric power for 36 months after completion of the City' new i'nterconnection faciirtzes at a rate not to exceed the Company's approved wholesale rate schedule in effect at that time (Exhibit GT-29, at 43) .
Homestead' high-voltage interconnection facilities were completed in October of 1977. Without advance notice to Homestead or any indication from the City that it no longer wanted average-priced firm- power, FP&L filed the rate change, application with this Commission which proposes to terminate SR service to Homestead. In place of SR power, FP&L states it will. sell Homestead, incre-mentally-priced, curtailable Schedule D power, which the Company admits is more expensive than schedule PR when used for base load.
Thus, Homestead has received wholesale service from FP&L since the 1950's, including firm requirements ser-vice under the SR-1 tariff since that tariff f ir st became ef'fective. From the time of agreement in 1973 to completion of the interconnection in October 1977, FP&L served Home-stead under the SR-1 tariff (Exhibit 29) . We find no evidence to support FP&L's contention that completion of the interconnection somehow eliminated Homestead as an existing wholesale requirements customer. Nor is it persuasive to assert that the parties intended for Home-stead to be served at an incrementally-priced Schedule D rate instead of the average-cost schedule SR. 47/
m
</ The record indicates that FP&L did not publish a rate level formula for Schedule D until February 10 9'78, wh n it made an offer o~. Schedule D capacity g
to ."-or" Pserce.
Ql ii Docket Nos. =R78-19, et al. Zndeed, knowing Homestead's desire for base-load firm power, the Company' representations as to the meaning of their interchange agreement in January of 1974 are quite to the contrary. Zt would be difficult to reach any other con-clus'on, given the weight of this largely unrebutted evidence.
FP&L's Relat'ionshi with Fort Pierce The efforts of Fort Pierce to, purchase f irm power from FP&Z, bear a marked similar ity to those of Homestead. Zn March of 1976, Fort Pierce approached the Company about purchasing firm power to meet the the City'- base load .requirements and using its own generators for peaking. purposes. Fort Pierce renewed its letters to FP&Z, in April and December of 1976. request in The December letter requested separate price quotations for base, inter-mediate and peaking capacity. The City also informed FP&Z, that it immediately wished to begin purchasing "base capacity and energy on a year-round basis in amounts ranging from 25 NW to 30 MW," and requested a statement of the Company's terms and conditions. Although FP&Z recognized its obligation to provide service under schedule SR-1, both in an internal memorandum and in a letter to Fort Pierce, the Company failed to respond with specific information on which Fort Pierce could act. After another letter to FP&L in April of 1977, the parties met in July and Fort Pierce was told that FP&L had no firm power to sell. 48/
Fort Pierce maintained its position that it was entitled to firm power under the SR-1 tariff throughout the remainder of 1977. On October 14, 1977, FP&L filed changes to the tariff which limited its. availability'o existing customers.
Thereafter, the Company offered Fort Pierce up to 240 .MW of capacity through the end of 1980, but under the terms of interchange Schedule D, not schedule SR.
Cn March 24, 1978, during the cross examination of FP&L's rate design witness, -Lloyd Williams, by counsel for Fort Pierce, Mr. Williams acknowledged that the City was eligible to purchase firm service under the SR-1 tariff. The same day, FP&Z, delivered a draft service agreement to the City and firm service began immediately.
However, a dispute remains concerning the duration of service. and FP&Z, has stated its intention to. terminat service to Fort Pierce if we approve its proposed re-striction of firm service to named and existing customers 48/ However, in July of 1976 FP&Z 's System Planning Department prepared a ma'rket assessment of f'm intercharge sales between 1977 and 1985 which pro-jected an "available supply from FPL'" ranging between 1'604 MW and 1995 NW in 1977. Th's report assessed the opportunities for sale of firm power to 10 different utilities in peninsular Florida, including Fort Pierce (Exhibit GT-7) .
~I <Qi 32 Docket Nos. ER78-19, et al.
which do not have generating capacity sufficient to meet their oeak loads.
Limitations on Alternative Sources of Caaacit Unre-butted Company documents in evidence indicate that FP&L's policy to retain full ownership of the nuclear it is generating plants which it constructs. The Company has stated that the full capacity of these units is needed to serve its own customers; so sharing is not to be anti-cipated unti'1 FP&L. reaches the, optimum amount of nuclear capacity for its system (.Exhibit 27) . However, no party disputes that joint ownership o f such. facilities would provide municipal and cooperative utilities (as well as other utilities in the region) with access to FP&L's economies -of scale (Exhibit GT-l, at 6).
FP&L is the sole owner of three operating nuclear plants having aggregate capacity of 2,188 MW. FP&L has agreed to share a portion of St. Lucie No. 2 nuclear plant with neighboring systems including Homestead and New Smyrna Beach; however, FP&L documents in evidence indicate that this was done at the insistance of the Justice Depart-ment and that FP&L has not committed itself to share the capacity of any future unit (Exhibit GT-71, at 22). 49/
The Availabilit of Transmission Services FP&L now offers four wheeling services. which correspond to its interchange capacity and energy services. 50/ Wheeling may be provided for one-year periods, with service available at the sole discretion of FP&L when trans-mission capacity is not otherwise required by the Company.
Transmission schedules TA, TB and TC correlate to inter-49/ In 1973 FP&L considered cancelling St. Lucie No. 2 because of "escalating costs and Justice Depart-ment review of our antitrust status" (Exhibit 20).
Then in 1976 the Company considered a shift to coal-fired plants for future base-load generation "to eliminate the Atomic Energy Act as a route to municipals'nvestment in generation" (Exhibit GT-1, at 13). See also, the decision of the Atomic Safety and Licensing Appeal Board, Nuclear Regulatory Commission, in Florida Power & Light Co.,
Docket No. 50-389A (ALAB-420, July 12, 1977),
regarding ant'rust review proceedings on St.
Lucie No. 2.
A complete description of these four services is found in Fxhibit 28 (REB-AX), a draft service agreement sent to the C'ty of Fort Pierce on December 6, 1977.
The rate for these services is currently under adjudication.
Qi 1y Docket Sos. ER78-19, et al.
change schedules for emergency, scheduled and economy capacity and/or energy services. 51/ Of particular signif icance to this case is schedule TD, denominated "firm transmission service." However, "firm" is a misnomer because Schedule TD service may be reduced or interrupted at the Company's discretion for periods up to 30 days. 52/
In short, these four wheeling serv'ices only offer surplus transmission capacity on an as-available basis.
FP&L does not contend that any of these four wheeling services could be utilized to transmit alternative power supplies to utilities within: the relevant markets from third parties eauivalent to those obtainable under schedules SR-2 or PR. The Company states that an appropriate rate would have to be negotiated at the time a potential wheeling customer arranged its alternative power supply. 53/
i1/ ~Su ra at 4-5.
'52/ Section E of the draft agreement (Exhibit 28, REB-AX) provides:
In the event that Firm ransmission Service cannot be provided due to an unanticipated reduction or interruption of FP&L's transmission facilities supplying such service, or if such service is provided in an amount less than 80%
of the Contracted Demand for Firm Transmission Service as a result of unanticipated reduction or interruption of power delivered by the Commission to FP&L for the City's account pur-suant to Service Schedule D of'he City-Commission Contract, and such reduction or interruption continues for a period of thirty (30) days, the Charge for Firm Transmission Service will be ad j us ted as follows: In each. succeeding month, the higher of ( a) the maximum HH delivered to FP&L in any one hour during that month, or (b) the maximum iVvT delivered to FP&L in any one hour during the- preceding six months, will be substituted for the Contract Demand for Firm Transmission Service for purposes of cal-culating the Charge for -Firm Transmisison Service. Upon such reduced or interrupted service bein'g restored to 80% or more of the Cont"act Demand for Firm Transmission Service, the Charge in each succeeding month shall be based upon the full Contracted Demand for Firm Transm'ssion Service.
53/ FP&L brief opposing exceptions at 42.
4i Docket Nos. ER78.-19, et al. 34 THE REASONS GIVEN SY FP&L FOR ITS TARIFF LIiMITATION PROPOSALS FP&L would seek to justify its proposed limitations on full and partial requirements availability in terms of ooerational constraints.. Specifically, it asserts that f uture power supply is too uncer tain to allow unl imi ted access to its r equir emen ts service.
According to FP&L, customers which are self-sufficient in generating capacity could arbitraril'y shift their load between service from FP&L. and their own generation.
This would..purportedly lead FP&L to maintain capacity in excess of its other customers'eeds but with no assurance that such capacity would be thereby increasing rates to all customers.
fully utilized, The Company proposes to remedy this uncertainty by making these on-again/off-again customers ineligible for service under schedule PR.
However,. the difficulty with this proposition is that it has virtually no record support and is based on a few conjectural statements by Company witnesses. In fact, FP&L's rate design witness prepared a model load duration curve in 1975 showing that customers with generating capacity less than peak demand and customers with capacity greater than peak demand would each purchase base-load requirements from the Company, under an SR schedule modified for parallel operation, and use their own capacity intermittently to meet intermed'iate, peak and reserve demand's (Exh'ibit GT-7l, at 33) . This is consistent with the repeated requests of Homestead and Fort Pierce for base-load firm power.. 54/ Moreover, the natural inclination of. these systems to buy base-load power would apparently be reinforced .by the design of FP&L's PR rate which is intended to promote high load factors. 55/
Suora at 27-31. Again in their testimony, Plorida Cities state their intention to use schedule PR for base-load purposes and use their own generation for peaking (Tr. 659) .
55/ suor at 3-4,. Sh'le ppaL is discouraging ourchases
'oy self-suffic'ent municipals it has aoparenrly adooteo a marketing strategy wnich promotes high load factor usage as a means of improving its declining system load factor (Fxhibit GT-64) .
4t Docket Nos. ER78-19, et al. 35 FP&L relies on oil, natural gas and uranium to fuel its generation. It cites the 1973 oil embargo and resulting dras" ic, oil price,.increases and the expiration of long-term oil supply contracts and replacement by three-year contracts to cast uncertainty upon its oil supply. As for gas supplies, it references high levels of curtailment and the expiration of a major gas supply contract in 1979.
Concerning nuclear fuel, FP&L notes that. it only has a two year inventory and that its long-term supply contract was cancelled by the seller in 1975.
FP&L may well fac fuel supply problems, as do other suppliers in the electric utility industry. However, they are not of a magnitude that would justify the proposals be'fore us in this case. It appears that FP&L continues to possess long-term fuel oil contracts and that it has entered into shorter-term oil contracts (3 years) wi'th favorable cancellation provisions in order to gain greater flexibility in responding to price changes on the open market (Exhibits 22, at 3; 51, at 9) . FP&L's natural gas warranty contract with Amoco Production Company provides for daily deliveries of 200 MYcf through 1988, such deliveries being beyond the purview of the present curtailment plan of the transporter of this gas,, Florida Gas Transmission Corporation (Exhibit 51, at 9; Tr. 431) . 56/ Finally, an affiliate of FP&L is engaged in uranium exploration (Tr. 454) and FP&L's existing, nuclear units do not appear in danger of being cur tailed due to fuel shortage. 57/
56/ See, Sebrin Utilities Commission v. FERC, F.2d 5th Cir. Nos. 77-2911 and 77-2972 (March 20, 1979).
57/ In 1978 FP&L and several other utilities won a judgment in federal district court against their nuclear fuel reauirements supplier, Nestinghouse Electric Corporation.
Vir inia Electr ic & Power Co. v. Yiestin house Electric Coro., Civ. No. 75-0514-R (E.D. Va. October 27, 1978).
Zn an unreported opinion the court held that Westinghouse was not. excused for deliver ing nuclear fuel by ' reason
~f* . ' '
var ious utilities. See, Antitrust Trade Regulation Reporter, No. 887, at A-15 (November 2, 1978).
41 I~
Docket Nos. ER78-19, et al. Among the fuel-related problems which FP&L gives as a reason for limiting firm wholesale service is its inability to procure a coal supply contract. However, on cross examination, FP&L vice president Gardner acknowledged that the Company has no coal-fired generation and has no plans to construct any. These po'nts are confirmed -by the testimony of FP&L's vice president in charge of fuel procurement which was
,presented, to the Florida .Public Service Commission in the spring of .1977 (Exhibit 22). 58/ On brief, FP&L has argued that the inability to obtain a coal supply contract has impaired its ability to plan coal-fired generation.
However, the only evidence in the record of FP&L's need for such a plant was its desire to avoid municipal access to nuclear generation, the base load alternative to coal f which could come from. antitrust review before the Nuclear Regulatory Commission. 59/
FP & L po in ts to environmental regula tions which make construction of coal-fired units difficult and make nuclear units almost impossible to build. It also points to escalating costs, litigation and regulatory delays and requirements as additional factors stopping future nuclear unit construction, or at least yielding a 12 year lead time which necessitates equal lead time for load forecasting.
It refers to its cancellation of the proposed South Dade nuclear units .and the substantial delay in licensing and resulting increase in capital costs of its St. Lucie No. 2 nuclear unit. As for existing ge'nerating units, FP&L states that its Turkey Point nuclear units. have experienced steam generator leaks causing unscheduled outages in the past and requiring extensive scheduled outage in the future for repair, and that its combined cycle Putnam units, due to their novel design, have not been reliable. Fina13;y, FP&L refers to its common stock selling below book value as evidence of .financial difficulties which have limited its construction budget to internally generated cash.
58/ Exhibit 22 indicates that while coal may well be. used in the future,: economic, environmental and reliability problems make it largely irrelevant to FP&L's current capacity planning.
a9/ 8uata at 32, n. 48.
Cl 0 ~
~
Docket Nos. ER78-19, et al. Vie certainly cannot deny that these constraints do pose problems for utilities such as .FP&L, but the record, fails to establish that FP&L i.s so hampered by regulatory recuirements and financial difficulties as to be incapable of expanding its generating capacity, as needed i:n the future. FP&L is, after all, offering 240 MW of Schedule D capaci.ty to Homestead and Fort Pierce, and the recent rate of increase in demand by FP&L's other customers cannot be characterized as rapid. FP&L has been greatly reducing its demand and load forecasts in recent years, with the actual rate of growth being relatively low averaging at most around four percent annually (.Tr. 848) . To the extent that the record, gives any indication of FP&L's current financial condition, it reveals that FP&L has experienced significant improvement in earnings and related market factors. About the time FP&L filed this, case, it reporting lover, more manageable growth; greater internal vas generation of funds; improved earnings and coverage ratios; and increased dividends (Exhibit GT-78). Suffice it that the record, comprised largely of company documents, is to say ambivalent on this issue.
."P&L would support the separation of full and partial requirements. tariffs in terms of costs of service on the basis of different load patterns. 60/ These separate full and partial requirements tariffs differ both in terms of demand and energy charges. FP&L contends, therefore, that it has designed different rates to reflect more precisely the different costs of serving these different customer groups. Establishment of separate full and partial wholesale requirements rates is common practice.
vie have in fact recognized the differences in the costs of serving full and partial requirements customers, not to mention different types of partial requirements customers. 61/ Zn the present case, FP&L's proposal of separate full and partial requirements rates appears reasonable. 62/
60/ FP&L asserts that its wholesale customers without any generating capacity have relatively stable and predictable load patterns which allovs, it to plan operations and design rates to recover costs of serving these full requirements customers. It further con-tends that partial requirements loads are less stable but that the PR tar.iff allegedly encour'ages such customers to stabilize their purchases, of power..
61/ E.c., Boston Edison Company, Opinion No. 809-A, Docket Nos. =-7738 and Z-7784, issued December 9, 1977 (mimeo Rt 20).
62/ Of course, in Phase I of this docket ve are not addressing the specific costs of service and rate designs of the SR-2 and PR tariffs. Accordingly, our determination does not reflect on how these two rates will actually function.
4l 5
Doctcet Nos. >>R78-3.9, et al. 38 BALANCING THE PUBLIC INTEREST CONSIDERATIONS When the SR-2 and PR tariffs are viewed from a per-spective on the relationships between FP&L and other utilities within the relevant markets, the Presiding Judge's conclusion that the Company's proposal has "no discernible anticompetitive effect in and of it-self" is inadequate. 63/ With alternative sources of base-load wholesale capacity unavailable, FP&L,'s tariff restrictions would deny to Homestead, Fort Pierce and other nominally self-sufficient utilities within the relevant market the only remaining source, of supply, schedule PR. It would conclude, finally, the municipals efforts over ten years to obtain a source of economically-priced, base-load power. Municipals like Homestead and Fort Pierce would become likelier to leave the utility business..
Indeed, the citizenry might force these utilities to come to FP&L requesting takeover. See, City of Mishawaka v.
American Electric power Co., aunra, 465 F. Supp. at 1329.
Of even greater importance to the Company. would be the assurance that in future franchise renewal contests with potential retail market entrants, it could point to existing municipal utilities as characteristically expensive and unable to exploit scale economies.
r Homestead and Fort Pierce would not be able to economically utilize higher-pr iced, lower-quality Schedule D service to meet their base-load requirements.
Such offers to sell at impractical prices and terms have been construed as unlawful refusals to deal, when done to further monopoly power. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 3S9 (1927).
'63/ We recognize and fully appreciate that the Initial Decision was written before FP&L agreed to continue to serve Homestead and Fort Pierce under its PR tariff pending the final outcome of this case. We have not been burdened by the time constraints faced by the Presiding Judge. Under the circumstances the Judge is to be commended for his efforts.
0 0 C Docket Nos. ER78-19, et al. 39 The restriction of wholesale service to named and existing customers is an even'reater threat to potential franch'se competition. The record indicates that, FP&L generally plans to minimize sales of average-priced wholesale power to municipals and cooperatives (Exhibit ST-17). After reviewing the record of FP&L's efforts to renew the Daytona Beach frachise, it does not appear likely that the Company would offer a potential distribution utility an average-cost rate. The signal to potential retail dis-tributors in areas presently served by FP&L at retail and over which FP&L has wholesale monopoly power is quite clear.
Cf., Cit of Mishawaka v. American Electric Power Co., sunra.
ppaL's offer to drscuss the feasrhrlity of servrce to new customers under specific contract rates does not reassure us. 64/
The balancing of competition against other public interest considerations, required by Cit of Huntin bur v., rPC, 65/ becomes relatively simple once thzs case is 64/ As Staf'f notes in its brief on exceptions, at 9, the Presiding Judge erred in finding that FP&L had committed to serve new systems in F?&L's service territory.
65/ 498 Fe2d 778 (D.C. Cir. 1974).
Ik t 4h
Docket, Nos. ER78-1'9, et a1. stripped to its essential elements. The proposed restric-tive provisions are anticompetitive, we find no counter-vailing reasons for their implementation, and they are to The Company has not demonstrated that it should be deleted.
be allowed to change the general availability provision of schedule -SR-1 which makes wholesale service available to all municipal and coooerative customers in FP&L's service terr itory. 66/ Proposed terminations of firm, average-cost service to Homestead and Fort Pierce are based on these restr ictive provisions, so the proposed cancellations are rejected. The Homestead cancellation would also violate the understanding of the parties that this customer would continue to purchase schedule SR after the completion of their inter-cbnnection. FP&L shall continue to serve Homestead and Fort Pierce, under schedulle PR. However, the proposal to bi-furcate schedule SR-1 into separate rates for total require-ments and partial requirements service is soundly based with no discernible anticompetitive effect and we .approve it.
In spite of the anticompetitive conduct recounted above, we wish to stress that there may be acceptable service limitations with diminished anticompetitive effects which ameloriate some legitimate operational problems faced by FP&L. Indeed, the intervenors recognize that the Company should be allowed to fashion reasonabLe terms and. conditions to wholesale service.
However, FPGL, has not provided us .with any middle ground, much less a showing that it has selected a tariff limitation that is the least anticompetitive means of solving any such operational problem.
Finally, we note that FP&L has- matters. pending before us in over 30 dockets, most involving interchange transmission service filings in which antitrust allegations have been made.
66/ Schedule SR-1 provides:
AVAILABLE:
In a13. territory served by the Company.
APPLICATION:
To electric service supplied to a municipal electric utility or to a cooperative
.on-profit membership corporation organized under the provisions of the Rural Electr ic Cooperative law for their own use for resale.
41 4
11
,r
Docket Sos. ER78-19, et al;41-We see littlemade presentation need in those cases for the kind of elaborate in this one. It would be helpful to the Commission for the parties to pinpoint the competitive pro-blems and defenses relating to the filings in each of these cases.
The Commission orders:
(A) The Initial Decision issued in these consolidated proceedings on. April 21, 1978, is hereby reversed.
(B) All limitations on the availability of whole-sale requirements service, as proposed by FP&Lg except for the limitation, of full requirement service under the SR-2, tariff to utilities with no generating capacity, are hereby rejected.
(C) FP&L is--directed to revise its proposed SR-2 and PR tariffs to conform to this order within 60 days.
Until revised tariffs are accepted by the Commission, the availability provisions of the otherwise superseded SR-1 tariff shall remain in effect..
(D) The notices of cancellation of requirements service to Homestead and Fort Pierce are hereby rejected.
(E) Exceptions not granted are denied.
By .the. Commission.
(SEAL)
Lois D. Cashell, Acting Secretary.
41 -
7g