ML18192B400

Letter Regarding Advice Pursuant to Provisions on Section 105c of the Atomic Energy Act of 1954 in Regards to Arizona Public Service Co

ML18192B400
Person / Time
Site:	Palo Verde
Issue date:	04/08/1975
From:	Kauper T US Dept of Justice (DOJ)
To:	Shapar H Office of Nuclear Reactor Regulation
References
Download: ML18192B400 (22)

Text

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>, NRC Lii RIBUTION FOR PART 50 DOCK

... TERIAL (TEMPORARY FORM)

CONTROL NO:DD FILE'ROM Dept of Justice Washington, DC DATE OF DOC 4-8-75 DATE R EC'D LTR 4-11 "75 XXXX TWX RPT OTHER TO:

gr Shaper ORIG one signed CC OTHER SENT AEC PDR SENT LOCAL PDR'LASS UNCLASS PROPINFO XX}OGK INPUT DESCRIPTION:

Ltr w/attch...trans comments on the Anti-trust review of Palo Verde..-...

NO CYS REC'D 1

ENCLOSURES:

DOCKET NO:

STN 50"528A/529A/530A rjCKZ0WL~DG>>

PLANT NAME:

Palo Verde 1, 2,

& 3 FOR ACTION/INFORMATION 4-17-75 ehf BUTLER (L)

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W/ Copies PARR (L)

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W/ Copies STOLZ (L)

Ml/ Copies YASSALLO (L)

W/ Copies PURPLE (L)

Ml/ Copies ZIEMANN(L)

W/ Copies DICKER (E)

W/ Copies KidlGHTON (E)

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P. COLLINS DENISE REG OPR FILE 5 REGION (2)

T.R. WILSON STEELE TECH REVIEW SCI-iROEDER MACCARY KNIG HT PAWLICKI SHAO STELLO HOUSTON NOVAK ROSS IPPOLITO TEDESCO I ONG LAI NAS BENAROYA YOLLMER DENTON G R IMES R.

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Howa

. -'. r, Esquire Executive egal Director Nuclear Regulatory Commission Nashin'gton, D.

C.

20S55 Re:

Arizona Public Service

Company, et al.

Palo Verde Nuclear Generating Station, Units 1, 2

& 3 NRC Docket Nos.

STN 50-528A, STN 50-529A, STN 50-530A

Dear Hr. Shapar:

You have requested our'dvice pursuant to the provisions of Section 105c of the Atomic Energy Act of 1954, as

amended, in regard to the above-cited application.

THE PACILITY The Palo Verde Nuclear Generating Station (PVNGS) is a

project owned jointly by six electric utility companies as tenants in common.

Pour of the participants serve areas in Arizona and two serve areas in New Mexico.

PVNGS will consist of three units.

Each unit will have a generating capacity of 1270 megawatts.

The three units will be constructed on a

site located approximately 36 miles west of Phoenix, Arizona.

Unit No.

1 is scheduled for operation in 1981, Unit No.

2 in late

1982, and Unit No.

3 in 1984.

The total cost of this project is estimated to be in excess of

$ 2 billion.

One of the participants, the Arizona Public Service Company, will have the responsibility for building, operating, and main-taining the facility.

THE APPLICANTS Oi The participants in PVNGS and their respective ownership interests, or "Generation Entitlement Shares,"

are as follows:

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~Alleant Arizona Public Service Company Salt River Project Agricultural Improvement and Power District Generation Entitlement. Share 28.1%

28.1%

Tucson Gas and Electric Company

15. 4%

Arizona Electric Power Cooperative, Inc.

2.4%

El Paso Electric Company Public Service Company of New Mexico

15. 8%

10. 2%

Arizona Public Service Com any The Arizona Public Service Company (APSC) is an investor-owned utility providing service in eleven of Arizona's fourteen counties.

Approximately 45% of the population of the state re-ceives electrical power from this Applicant.

Its electrical customers numbered 308,643 at the end of 1973.

In terms of load, generating

capacity, and transmission facilities, APSC is the largest of the six applicants.

APSC's 1973 peak load was 2,191 mw.

Its current dependable generating capacity is 1,984 mw and is expected to increase to over 5,000 mw during the next 10 years.

Its share

.in PVNGS will be approximately 1,000 mw, representing one-third of its ten year growth and one-fifth of its then total generating capacity.

APSC is a member of Western Energy Supply 6 Transmission Associates (WEST) which provides a forum for regional coordination of energy resources.

APSC has interconnections with the other major bulk power suppliers in the area and participates in several joint ownership arrangements of large scale generating facilities.

APSC supplies full requirements to three wholesale customers:

City of Wickenburg (peak load of 7.8 mw), Navapache Electric Cooperative (peak load. of 18.8 mw),

and Papago Tribal Utility Authority (peak load of 3.8 mw). In addition, APSC provides partial requirements to ten other wholesale customers (peak loads range from 2.4 mw to 158 mw).

Two of the ten partial requirements customers rely on their self-generating capability for most of thei.'r power requirements.

Another of the ten, the Arizona Power Authority (APA), is the marketing agent in Ar'izona for certain Government hydroelectric projects.

Its primary sources of power are the Hoover Dam project and the Parker-Davis projects.

The remaining seven

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partial requirements customers rely on the APA or the'nited States Bureau of Reclamation (USBR) as the'ir primary source of power.

All of the above,

however, may have to look to APSC to satisfy their future load growth require-ments.

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Salt River Project Agricultural Im rovement and Power District The Salt River Project Agricultural Improvement and Power District (SRP) is a publicly-owned utility. organized under the laws of the State of Arizona.. It has the legal status of a municipal corporation.

It operates the Salt River Project, authorized under the Federal Reclamation Act of 1902, under contracts with the United States Govern-ment.

SRP provides electrical service in a 2,,900 square mile area in central Arizona.

At the end of 1973, SRP served 225,926 electrical customers.

- In terms of. system load.and dependable generating

capacity, SRP ranks second among the Applicants.

its 1973 system peak was 1,679 mw; and its dependable generating capacity was 1,365 mw, 239 mw of which is hydroelectric.

In addition, SRP purchased another 500 mw of government-generated power.

In terms of transmission capability, SRP owns 6,000 pole miles of distribution lines and 870 pole miles of transmission and subtransmission lines..

SRP will have the responsibility for building and-maintaining the 500 kv transmission lines associated with PVNGS.

SRP has a number of coordinating agreements and joint participation arrangements with other major bulk power suppliers in the area.

SRP has one full requirements wholesale customer:

Roosevelt Water Conservation District. (peak load of 16 mw).

SRP provides partial requirements to nine other distribution systems (peak loads from 1.2 mw to 48.5 mw).

All of these nine systems rely on the Government power marketed by APA or the USBR (from the Colorado River Storage Project) as their primary source.

Tucson Gas 'and Electric Com an The Tucson Gas

'and Electric Company (TGEC) is an in-vestor-owned utility which serves an 1155 square mile area 1/

The APA will have a 500 mw pumped storage project (Montezuma) available in 1980 and also has plans for a 1366 mw hydroelectric project (Hualapai) to be available in 1983.

This latter project requires Congressional approval.

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consisting of the City of Tucson, Arizona, and its environs.

TGEC served an estimated 140,000 electrical customers in 1973; Its peak load during the same period was 732

.mw.

TGEC has a current dependable generating capability of slightly over" 1000 mw. It owns approximately 5800 pole miles of subtransmission and distribution lines in the'ucson area and is a joint owner of the 500 kv and, 345 kv lines that will be used to bring power from jointly owned units in northern Arizona (Navajo Project) and northwestern New Mexico (San Juan Project, and Four Corners Project).

TGEC has interconnections with other major utilities in the area.

TGEC has no wholesale power supply contracts.

Arizona Electric Power Coo erative, Inc.

TheArizona Electric Power Cooperative, Inc.

(AEPCO) is a publicly-owned REA-financed cooperative.

AEPCO owns two small.gen'crating plants

'(combined dependable capacity of 120 mw) and approximately 200 circuit miles of 115 kv and 69 kv transmission lines. It serves five member distribution cooperatives.

Four are located in the southeast part of Arizona:

Duncan Valley Electric Cooperative, Inc.;

Graham County Electric Cooperative; Sulphur Springs Valley Electric Cooperative, Inc.;

and Trico Electric Cooperative, Inc.

The fifth member, Mohave Electric Cooperative, only recently joined the group and serves in two small areas in the western part of Arizona.

AEPCO's peak load in 1973 was 150 mw.

It purchases deficiency power and energy from USBR.

AEPCO sells bulk power only to its five members.

It has no retail customers.

One 'of its members, Graham County Electric Cooperative, provides partial requirements to two small towns in its service area.

The Town of Safford gener-ates part of its power requirements and purchases part from USBR.

The Town of Thatcher also purchases its power from USBR.

Both towns rely on the cooperative for emergency power and to satisfy load growth requirements.

El Paso Electric Com an El Paso Electric Company (EPE) is an investor-owned utility serving an area in southern New Mexico and western Texas.

EPE had a peak load in 1973 of slightly over 600

.mw and generating capacity of approximately 800 mw. It has an estimated 138,000 el'ectric customers, the majority of which are served at retail.

EPE is a member'f the New Mexico

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Power Pool along with the other five GGTs operating in western New Mexico and participates in several joint ownership arrangements of generating facilities.

EPE provides partial requirements to two wholesale customers:

Rio Grande Electric Cooperative (a Texas cooperative with a peak load of 6 mw) and Community Public Service Company (a Texas-based G&T serving a load of approximately 70 mw in New Mexico).

Public Service Com an

. of New Mexico The Public Service Company of New Mexico (PSCNM) is an investor-owned utility serving north central New Mexico.

At the end of 1973, it was serving 160,000 electric customers.

PSCNM had a 1973 peak load of 533 mw and a generating capacity in excess of-700 mw.

PSCNM has one full requirements whole-sale customer, the City of Gallup (peak load of 20 mw), and provides partial requirements to two other wholesale customers:

Community Public'Service Company (discussed supra),

and Plains Electric Generation and Transmission Cooperative, Inc.

(a small GGT cooperative with 50 mw generating capacity and approximately 100 mw peak load serving 11 distribution coop-erative members at wholesale).

Plains Electric Generation and Transmission Cooperatives, Inc. had until recently pur-chased all its power requirements, above what it could

generate, from USBR.

In mid-1974 it entered into a bulk power supply contract with PSCNM.

PSCNM is a member of the New Mexico Power Pool and participates in several joint ownership arrangements of generating facilities with other utilities.

OTHER BULK POWER SUPPLY SOURCES IN THE SERVICE AREA OF THE APPLICANTS The principal supplier of bulk power at wholesale in the service area of the Applicants has been the United States Government.,

The hydroelectric resources on the Colorado River have in the past been sufficient to satisfy the requirements of the mun'icipal, cooperative, and other preference customers.

APSC started providing firming power as the peak demands began to exceed the dependable capacity of the Government projects.

SRP developed its own thermal sources to firm up its hydroelectric facilities and now provides firming power to small systems in the area.

But, with the exception of the few systems noted previously, the USBR and the APA remain the primary source, of bulk power to the independent distribution systems in Arizona and western New Mexico.

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RESULTS OF.

THE ANTXTRUST REVIEW PVNGS was initially planned as a joint venture between

APSC, TGGE and SRP.

Access was offered to other GGTs and eventually to all electric utilities in Arizona and New Mexico.

Xt appears to have been the practice of various of the joint applicants to achieve economies of scale by entering into joint ownership arrangements of generating facilities.

This in turn has resulted in the joint owner-ship of transmission. lines and/or reciprocal wheeling arrangements.

The presence of the Government-owned hydro-electric resources and substantial Government-owned transmis-sion has also resulted, in numerous reciprocal bulk power arrangements, and transmission ser'vices.

Thes'e arrangements have included small systems as well as the large systems.

No complaints were received and no other evidence was found of any refusal by any of the joint applicants to provide coordinating services to the smaller systems.

APSC and the SRP had on August. 3l, 1955 entered into an agree'ment which 'defined their respective service areas and provided that neither party would'ompete in the service area of the other'.

The l955 agreement was recognized in the contracts. which APSC subsequently entered into with

TGGC, PSCNM, Utah Power and Light Company and Nevada Power Company with the result that these latter companies wer'e restricted from disposing of any power delivered under the contracts in SRP,'s service area except, through 'SRP.

These applicants removed, of their own volition, the restrictive provisions contained in the above referenced agreements.

Certain, other provisions contained in the power supply agreements. between APSC and. certain of its, wholesale customers and between SRP, and certain of its wholesale customers condition the wheeling of power under the agree-ment, in a manner which could. restrict competition.

The agreements reserve to APSC {or SRP as the case might be) the exclusive right to serve residential, commercial and industrial loads while. allowing the wholesale customer to serve only irrigation pumping loads.

At, the request of the Department, the Applicants agreed. to conditions to the license relating to transmission ser'vices, a copy of which

-is attached -hereto, which satisfactorily eliminates the anticompetitive effect of the'estrictions.

CONCLUSION In view'f the fact.that the applicants have agreed to license 'conditions which resolve the problems noted above,

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there is no other evidence currently before the Department that. any of the'applicants are using their market power to inhibit.competition.

There is no present reason to believe that licensing of the Palo Verde Nuclear Generating Station would have adverse antitrust aspects.

A hearing on this application would. therefore appear to be unnecessary.

Sincerely yours,

/

THOMAS E.

KAUPER Assistant Attorney G

eral Antitrust Divis on

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LAW O F'F IC C S SNELL a wtLMER FRANK L SNCLL JOSCPH T. MCLC?CRi JR.

NICHOLAS H, POWCLL DON CORBITT MAYNARDP. OOUDY I'RCDCRICK K. 5'ICINCRqJR JOHN J, BOUMA ROLAND R.KRUSC ARTHVR P. ORCCHFICLD H, WILLIAMFOX ROBCRT C. BATCS LORCN W, COUNCL'IJR THOMAS J. RCILLY JAMCS A,HOHCR BRUCE NORTOH JAY D WILCY CRANC McCLCNNCN TCD J. THAYER PCTCR J. RATHWCLL CHARLLS R. BCRRY STCVCH M. WHCCLER CHARLES II.AYCRS DONALD O. COLBVRN MARK WILMER CDWARD JACODSON THOMAS C. SUNDCRLAND ROGCR W. PCRRY (IDIO IDF3)

RICHARD SNCLL BURA SVTTER STCPHCN W. CRAIO JOHN P. PHILLIPS ARTIIUR C OCHR RICHARD MALLCRY JARON D.NORDCRO JON S,COHCN WARRLN C.PLATT MICHAEL L. G*LLAGHCR OVY O,OCLBRON WILLIAMA HICKS CI LAWRCNCF WRIOHT OCOROE H. LYONS DANICL J. McAULIFFC BRUCL D. PINORCC JAMES W. REYNOLDS BRIAN L ZCMP 3IOO VALLEYCCNTCR PHOCNIX, ARIZONA GSO73 OO2 252 '/2ll April 3, 1975 Mr., John Whitler, Attorney Antitrust Division U. S. Department of Justice Washington, D.C.

20530 Re:

Palo Verde Nuclear Generating Station (Units l, 2s3)

Arizona Public-Service Company Salt River Project Agricultural Improvement and Power District Tucson Gas and Electric Company.

Public Service Company of New Mexico El Paso Electric Company Arizona Electric Power Coo erative, Inc.

Dear Mr. Whitler:

As I informed you in our telephone conversation earlier today, I have been authorized by Arizona Public Service Company and Salt River Project Agricultural Improvement and. Power District to state on their behalf that each of them will consent to and accept the conditions set forth in the attachment hereto as con-ditions to the construction permits as may be issued by the Nuclear Regulatory Commission in NRC Docket Nos.

STiil 50-528, 50-529 and 50-.530.

Very truly yours, Aw~c~

ACG:sar ttachment

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UHXTS 1, 2 6 3, HUCLEAR REGEATORY COHHXSSXC5 CONSTRUCTXON PEBHXTS I'tKC DOCKET ROS. SFif:

50-528, 50-52 and 50-530

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As used herein:

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1.1 "3ulk Po~"er" means the e3.eetrf.c palm',

and;:-..any.=.=;.:..

'i, attendant

energy, supplied. or tnade available at,transmiasion=-

. or subtransmi.ss3.on voltage by one entity to. eootber,,

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1.2 "Eatity" means a person, private or.pubic;eo<-

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porationa municipal5.ty, a cooperative, an assocWe9on,.;g:;-',=..-'.:.

Point stoclc association or business trust o~ningI.opezat~a,:;;;-,,

"-.'.or prop'osing in goodfaith to om or operate equipment;;or.,'=.,".",'..-'="..:.'=.':':.

facile.ties for the generation, transmission or df.stribut:ioT",'.,':"':.:"-.'.'-

. Of electricity to or for the pU11$ c as a utilf.ty,.":::,:=.-:,'-;..-:::".::-:,,'=,'.=,::-.-:.:.:.:.'-:.".',.-;.',3 "Joint Applf.cant l,'83" means the. Ariscea*.':

Poblic.'=,-',=,'-.---;:-.::.-:-':::;.:;:,:,.'emrg.ce Ccnnpany and the Salt River Pro)eet fgricuiturol.~'-':;-:.-.':'.= :::-'..:.

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mprovMlent and PoMer Distxi.ct,

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Each Jo&t Applicant v5.11 transmit. BUHc'.pqner.:-::'-*','::-.:..;-:-:,-'-'.-',.':.':,'..-

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over its transmission

system, betgeen or amonI

.tpo.px';moze:=,".,-:,:.'-:.'-;;-.'.,::, '.=-;.:.

Eatities with r~hich it is interconnected, or ML.ll be,:fat:er>>,".::.'onnected in the future, wS.thout restrictions on use.or-".,:-.':.,'.,'

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'e ale of the paver so transmitted, prove,de6*that.sgcb:,:.;:-:,':-::::-':::,-;:-:,-'-::;:.:.-:.....:.:.

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services can reasonably be aecerunodated Qom a tee&%ca'f:,:::~:.:::;::::."-,::-'.":,:;." ";.::'

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standpoint without hnpairing each joint applicant.'8;.re1&bflitf:.

or 9-ts Ogll Use Of its fBCllitiesi

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I (b) Each Joint

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.icsnt i-ob3.igated 44n+this condi.tion to t:ransack.t Bulk Power Oa, the terms stated

above, and =in..eon aeet9.on tet.th each Joint Applicant'8 pram to constr' nev; -,

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'ransmission facilities for its own use,'o includ(.in-'its:

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" Planning and construction program.suEHcient Cransmlssf on;..':.'..'.",',:..:...

copncity for such Sulk Power transact'.ons, prarvMe8:.Chat:=:mich:,'-'

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Applicant has received suffici.ent advance notice as

-.amp,-:::be4.',: ":

- necessary from a tech':ca1 standpoint te-accoqmodate.-zhe-=':-.".';

'equiremants af any xequesthxg entity, and further.,'pxoytcted-':::."-

that such'ntity(ics) arc obligated as may. be agr eed(i:)

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share Cbe capital, operating and maintenance.'cost8:=..QF:;:-.8vcb:::.',-:.;-,.:-'.-.:;'.=:,':

ueM Cranomi.ssion facilitiea to the extent that:aMS

$ anali-:::.;:::.".".::::;:;;:::...

coot burdens mould ba imposed On. such: Jo&t:-.Jljp3iceinC:ix'.:-',:.':.-:.':::.":.:..'..':I.::.'.:.:-

4 (ii) to compensate the'oint Applicant jully..for -the':e&e':=.pg-",.:.-;'.;:,.:

itS GQGCCGls 3.

The foregoiag sha11'be implemented in a.mnmi6x'Liceiii.e..::;-'.'.:-';::::..:;.

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'eat Mith the provt.ozone of the, Pedeeil POMee';Acti.',eAQ:.:+11'-'.rat88;:,

4 charges Dr.*pmetices

.3.n. connection f:hexetU th:@re;.:.'.t;o.': bi.'",:pub) mtI:;.,',~.;,:;,'.

to who approval.of regulatory agencies -having:;.)ux'< 885.itheieyer::;;:.":::.

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