ML19209B413

Responds to NRC Request for Further Advice Re Tx Municipal Power Agency Participation in Nuclear Sites.Antitrust Hearing on Util Application to Participate in Nuclear Plant Units Is Not Necessary

ML19209B413
Person / Time
Site:	Comanche Peak
Issue date:	09/05/1979
From:	Shenefield J JUSTICE, DEPT. OF
To:	Shapar H NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD)
Shared Package
ML19209B411	List: ML19209B413 ML19209B415
References
NUDOCS 7910090650
Download: ML19209B413 (3)

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U,lmttb States Department of Justitt W ASil1NG' ION, D.C. 20530 ACIT A%T ATTOP%ET Cght m AL ,

ANTsf muST Devi3KM SEP 5 1970 -

Howard K. Shapar, Esquire Executive Legal Director Nuclear Regulatory Commission Washington, D. C. 20555 Re: Texas Utilities Generating Company, Comanche Peak Steam E?ectric Station, Units 1 and 2, NRC DJcket Nos. 50-445A and 50-446A

Dear Mr. Shapar:

You have requested our further advice pursuant to Sec-tion 105c of the Atomic Energy Act of 1954, as amended, with regard to the participation by the Texas Municipal Power Agency (TMPA) in the Comanche Peak Stear Electric Station, Units 1 and 2, NRC Docket Nos. 50-445A and 50-446A.

The Comanche Peak Steam Electric Station will consist of two units, each rated at 1150 megawatts. The station is being built and will be operated by Texas Utilities Generat-ing Company (TUCCO), a subsidiary of Texas Utilities Company (TU). 1/ By the terms of the agreement between TUGCO and TMPA, TMPA w.ll secure a 6.2 percent ownership interest, or 72 MW in each unit.

TMPA is an agency established in 1975 pursuant to Texas law, and it consists of four Texas municipalities engaged in the generation, transnission, and distribution of electric power. TMPA was formed so that manicipal systems with elec-tric generation in Texas could join together to build new ,

generation and to use their existing generation more effec-tively. The present members of TMPA are the Cities of Bryan, Denton, Garland and Greenville.

l/ The designation "TU" comprises the Texas Utilities Company and its various operating and service subsidiary companies including Dallas Power and Light Cor.pany, Texas Electric Service Comoany, and Texas Pct:ar and Light Company, each of of which is a joint owner of the Texas Utilities Generating Company (TUGCO).

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By letter to you dated August 1, 1978, the Department advised the Nuclear Regulatory Commission (NRC) that an antitrust hearing would be necessary in reference to the operating license application of TUGCO. That antitrust hearing, currently in the final stages of discovery, is scheduled to begin in February of 1980. The basis for the .

Department's recommendation that an antitrust hearing be conducted on the Comanche Peak operating license was that TU had combined with other utilities in Texas and agreed to disconnect from any other electrical utility that commenced operation in interstate commerce. In light of TU's dominant position in Texas, the fact that it had disconnected from other electric utilities in 1976 when those utilities went into interstate commerce, and in view of changed circum-stances in the electric utility markets in Texas, as set forth in my letter to you dated February 21, 1978, regarding the South Texas Project, NRC Docket Non. 50-498A and 50-499A, the Department concluded that an antitrust hearing was necessary.

Between 1976 and 1978 TMPA entered into two agreements with Texas Power and Light Company (TP&L), a TU subsidiary, whereby TP&L agreed to supply ready economy energy and in-terruptible off-peak economy energy to TMPA. On January 2, 1979, TMPA entered into two additional contracts with TU subsidiaries: the Comanche Peak Ownership Agreement and a transmission agreement. All of the foregoing contractual agreements contain restrictions which, in effect, foreclose TMPA from interconecting with and engaging in the buying and selling of power or energy with electric utilities that operate in interstate commerce. It is TU's " intrastate only" policy and practice which is the subject of the pres-ert Comanche Peak antitrust hearing. Resolution of th_

antitrust issues in that hearing will necessarily resolve any antitrust questions raised by these restrictions in the contractual agreements between TMPA and TU subsidiaries.

TMPA has agreed to be bound by the outcome of the present Comanche Peak antitrust hearing, including the resolution of the intrastate only restrictions in its contracts with TU subsidiaries (See attached letter). .

Our investigation of TMPA's application to participate in the Comanche Peak Steam Electric Station did, however, uncover the existence of an agreement entered into in 1973 between the City of Garland (Garland) and TP&L. This agree-ment effected a territorial division of retail marketing areas within Garland, a market jointly served by Garland and TP&L. In 1978 the Texas Public Utilities Commission jointly certified this market area to Garland and TP&L.

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This agreement continues to operate at the present time, and, in fact, an exchange of some of the allocated marketing areas between Garland and TP&L occurred in 1977.

The Department believes that a purely local agreement -

between a municipality and an investor-owned electrical util-ity operating under franchise granted by the municipality to divide retail marketing areas within the municipality's limits and which does not bear a significant relationship to competition in the generation or transmission of electric power at the "holesale level ordinarily does not form the basis fo: initia'.ing an antitrust hearing under Section 105c. This is not to say, however, that such agreements should not Le scrutinized by the NRC where relevant to other antitrust concerns. It is the Department,'s belief that the antitrust consequences, if any, stemming from such purely local agreements on the retail level would be more appropri-ately dealt with by state utility commissions or under state or federal antitrust legislation than by the NRC. Indeed, the Department is examining this agreensnt to determine whether further action is appropriate under the federal antitrust laws.

In light of the attached letter referenced above, where-by the members of TMPA have agreed to be bound by the outcome of the present Comanche Peak antitrust hearing, the Depart-ment believes that an antitrust hearing on the application of TMPA to participate in the Comanche Peak units is not necessary.

S'n rely m rs, J n H. Shenefield Ass' sant At.norney General Antitrust Division Enclosure

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