ML19256A313

Requests Addl Info About Allegations Raised Re Sc Edison Co Acting Anticompetitively in Regard to Facility

ML19256A313
Person / Time
Site:	Palo Verde
Issue date:	12/22/1978
From:	Goldberg J NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD)
To:	Bury J SOUTHERN CALIFORNIA EDISON CO.
Shared Package
ML19256A314	List: ML19256A313
References
NUDOCS 7901050019
Download: ML19256A313 (2)

Text

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N December 22, 1978 a,.,~

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John R Cory Od-General Counsel O

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Southern California Edison Company k

A P. O. Box 800 d

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2244 Ualnut Grove Avenue Posernead, Cali fot nia 91770 Re: Arizona Public Service Cor.pany, et al. (Palo Verde !'uclear Genarating Station, Units 4 and 5), 2C Dochot

,fiol. 50-592A, 50-593A De a r fir. D u ry :

By letter dated September 13, 1978, the Department ef Justice rendered its antitrust advice to the fluclear Regulatory Con aission re-garding the Applicants for a construction pernit for Palo Verde Unit:

4 and 5.

Wit h respect to Scuthern Cali fornia Edison Company (" Edison"),

the Departrant explained that it had earlier advised the Cormission, by letter dated April 6,19i6, that no hearing was necessary with respect to Edison's participation in Units 1, ? and 3 because Edison had earlier agreed to licer.se conditions in connection with its San Onofre plant..nd there war no other information which uarrar.ted a hearing.

The Departrnent advised that its review of Edison in connection with Palo Verde Units 4 and E had not disclosed any evidence of an cnti-competitivc situation which would warrant a hearing.

Upon receipt of the Attorney General's Septcmber 13th advice letter, notice was published in the Federal Register setting forth that letter and setting a date by which petitions to intervene and requests for an antitrust hearing were to be received.

While no petitions to intervene were received, the Conission did receive a letter dated OctoLer 25, 1970 (enclosed), from the Cities o f Anahein and Riverside, Cali fornia, informing the Commission that they have filed an antitrust suit against Edison in federal district court and are also alleging in proceedings before the federal Energy Regulatory Commission that Edison has acted anticcmpetitively.

Those Cities sent a more detailed letter of the same date (enclosed) to the Department of Justice taking issue with the Department's September 13th advice to the Commission regarding Edison and outlining certain of their antitrust allegations concerning Edison.

In both letters, the Cities stated that they were participants in Units 4 and 5 and were not requesting an antitrust hearing in conncction with those units in order to j

avoid the possibility of delaying the issuance of construction permits.

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er As a resul t. o f t' ~.r i n i t c rs, the."rcl r ar "v;ula tory Cc iir.sion S t ri f f i s i n ro n rm, j e n o f ; - fo r : tir,n it':ich rllem s tha t Edi.on, one ci'Hm,

. ' r.:r tici nan t' in b:lo Yere.'c Units 4 at C 5, is enragin0

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i n con mi.it ' iic h.. :V c r.1t e or i: fi,cc)n. siin:, tion in cr.sist>ni. uiih t he a n ti t.r'; t l au ; o r '.'ie p,l ici a.

o.. ic rl yi n c, Lhor' icus.

The B.C St a ff b :li ve: if is n ce,:ary to inruirc fert'nr it to the nature of the itll ac innc ra i, :d, pins t Edison and their r.;1ationship to the i

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'.W i.'. Picility.

'l" vould 'm Napy to consi6 r any cc:70nts E c'i s c.,, w l. ' l i

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<c to ti.' all' _ stions o f the Citic ; oi ":.o r in a d ' c.:rs i a'.

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i Edison to dit.

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lWr. w r.ny con:nts you ca re I

to -4..at to r:.or Benjanin H. Vogler, Assisu:nt Chief Antitrust Counsel.

Thank you vary nuch.

Vert truly yours.

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• October 25, 1970

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.J l'OTH 19 TOM AS C TRAUGi.8

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IE L e D A v.T '.G r4 JAPA L G C/.hL T CLL D ! r

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Secretary D IM O U.S.

Nuclear P.ugu]atory Comninnion D

Washington, D.C.

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Attention: Da c'c e t i n g and Service l-Branch

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e Publ S m v i c e' Cornanv et al Docket ':a n.

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50-59.

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Dear l '. r. Secreti.ry:

Ybis in in recnonne to the Nuclear Reculatory Commission's J

notice of Sept e. :m r 25, 1978 concerning : 'titions f o :. leave to intere ne a n

regnecta for a hearing on t.:.-

antitruct arpects of the application for a conc.truction termit for Palo Verde Units 1 and 5.

The Citle', of Ananeim an? :'. i v e r s i d :, California are pur-noing their r i r b t., to articipate in thone units.

The Cities be-lieve that they (and

.n e r. m o n otner.cartici; ants in the t" r o 4;ect) would b>

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any ce]<y of the conctructicn e r -'. i t.

The Citie' therefore do not ': e e ', an antitruct hearing.

!!o w e v e r, the Cities have filed an antitrust Euit against one of the participants in the Palo Veide project, Sout.trn California

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Federal E:.e rg y P.2 g u l a t o r y Cor-'.i s s i o n that Edison has acted anti-competitively:

FC.'.C Cocket

':c a. E-7777 (Phase II), E-7796, and ER76-205.

Although the Cities do

.ot hereby recuest an antitrust review of the a" plication for a construction permit in this pro -

ceeding, they exprecal? recerve and do not waive their antitrut claims and allegations precented or to be presented.in any forum.

Sincerely,

()).n.f. s'r3 v-Alan J.

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(,(, -D Attorney for the Cities of Anahein and

..f Rivernice, Call.crnia

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John II. Shenef; eld OO Assistant Attorney General D

D Antitru:it Divisjon Oo Unittd States Department O

o f. Justice D

A Washington, D.C.

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Arizona Public Service Connany et al. Palo Verde iTue] ear G5;EEiA:I 5MW^ frntT4 and iG~i f ~~~

Project :and;e r P-662A, Department of Justice File Number 60-415-95

Dear Mr. Shenefield:

This is with reference to your letter of September 33, 1973 to lloward K. Shapar, advising the Nuclear Regulatory Co

.iccion that in your opinion it is not necessarf for the Ccrission to hold an antitrust heating in the Palo Verde proceeding.

The Cities of Anaheiu and P. i.' e r s i d e, California do not seek an anti-trust revie-in relation to the co n s t. r u c t i o n pernit for Palo Verde units 4 and 5.

They (and other utilities) are participants in those units and want to avoid any delay in the incuance of a con-struction permit for the units.

Ilowever, the Cities take issue with the factual a s s u mpt. io n s in your letter.

Contrary to the implications of your letter, it is the Cities' experience that the San Onofre conditions have neither resolved nor prevented situations inconsistent with the antitrust laws.

In Cities' view, Southern California Edison Company has not lived up to the San Gnofre conditions, or if the conditions 'ce narrowly construed, Edison has in any event acted anticamnetitively.

Dre Ci t ies therefore recomend that the Department of Justice consider taking action, outside the Palo Verde proceeding, to enforce the San Onofre conditions and the

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antitrust laws against Ed i son.

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The Cities recomend action outside the !P'ilo 'Ve rde ' proc 6.{.d ing

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partly because many other electric systemstarlc involved in thq nd n O i., t-

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They and their electrie contomers r.ay be N3vorne]y affected if cc>ns t ruc t ion of the project in delayed by an antitrunt

reVieu, luaong other ob)igat.iont., the San Onofre conditionL obligate I:d i son to "trannmit bulk y ze r over its tran:.incion facilition within itn service area" and "une its bent e f f o r t. s to facilitate the trant. innion of bu]h power over then exi nting t r a n :.a i n n i o n facilitier outnide itn service area.

11everthelenL, Ed i c on han for exa.nple refuned Anaheiu a:.d Rivernide's requents for f i r.a transmincion carvice fro:n the ??orthwent, t h e r e h;. forec)aning the Cit.ien f om compe t. i ng for nupp]ien of bu]k po*ier from nellers in t he !! ort huent and from purchc.ning energy cold by the Bonneville Power Adninjut.r. lion to which the Cition have s t a t.u t o r y pre-forence.

(The facts an Cities understand t h e:a will be precented in tentimony on l eha] f of the Citien, t.o be nervcd October 27, 1978 in Federal Energy Regula tory Co:: mission Docket 1:o. E-7777 (Phane 11).

We sha]l send you a copy then.)

Briefly summarized, these are the facts an we understand then: Bulk power t ran: actions betsteen 1.he Pa c i fic I:or thuen t and California occur over the Pacific Morthwent--P3cific Southweat Intertle.

The princip.] facilitien of the Int ertie below the Oregon border are tuo 500 KV '. C lines control]ed under forty year contracts by Edinon and the two other ~n~Le:r of t.h e Cali f or ni; Power Pool, and an 800 P '/ Ot line in which Ed i non is entitled to ha]f. the capacity under a neventy-five year contract (uith t.h e Los Angelec De na r tr,e n t of water and Po. c r and three smal]er entities entitled to the othet ha)f).

Tocotla

, Edison, Pacifie Gas &

Electric Cocpany una San Diego Caa & Electric Company nou control about 2,800

.'4 c, of tne total 3,900 " c.

jn the Intertie.

Edison, PG&C and S L :: chare their artion of the Intertie 431, 50t, and 71.

(They eiso clare ir nor t s froa the ::o r t h w e s t.

on the n a...e per-centage banis.)

Further cr",

Fdison has the right of rirst refu-nal for any c;.nacity in the DC line that. is su: plus to the needs of Los Angelcc anJ the others (ann the, must aive Ed i r c;n substaa-tial notice before e t. t e r t : q to cell capacity rights in the DC line).

"areover, the California Pour Poel m bers claim that transminnion tights purchaad by otnet entitlen such an the Sacranento :4unicipal Utility District and the Califatnia Depart-nent of Water Resources revert to the Pool members Cae,n not uced by the other entities and cannot be resold to others.

The Pool members have refused.to recognize D'<..; ' s interim sale of part of its Intettie capacity to the Ci ties.

In Cities' view, Ed i con 's combining to control the Intertie has helped Edison to divide cales markets, to forecloce the Cities from supply markets, and to impose and maintain a price squeeze on the Cities.

For example, Edison, PG s il, and SUGsE use the I n t e r t. i e to export powe r to ::Orthwes t entities; 13: son, PG1 C an'i SDGsE appear to (: 1. :, J e such.:alec to ::o r thwes t entities 3i fror E;i i t o n,

501 from PGsE and 7i f rom SD ;& E.

The Califoraia Power Pool mem-m' n' Q

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i 3-ber. l i h r'u i : e divide t he im: he t within California.

An Cition underntand tho Poo) ag ro e.

n t., if a wholeaale buyer in !:d i so n ' <,

area prefors to buy f ro:: PGtM, the bu ye: r must g e t. I:d ) non ' a per--

rlinnion to do 50; and P f ' P, ' '

>:,t provide e'tra reserven for the nale (2001 ' pinning recervc., 'hich would be charged to t.h e buyrr), which tendn to Dahe cuch ar rang ewnt L u n u co no:li c,

l'i n a l] y, with the Cities countrained to dep?ndence on Edison, 1:d i non han been able to i t.po co a price squeeze on the Cition, charging them nore than it charges ret. ail cu s t on.e r n for ccaparable long period u n t. i l the Federal I:nergy Regul a tory servicen, for e Conmirnion reducen the wh o l e. n a l e r a t. e n.

The Cition are trying to enco ne t hc ir dependence on Edi:on, but. it takes time.

They hava nucceeded in purchaning como energy f ro:a Nevada P o.-te r Conpc.ny in an interi:

.rrangormnt alno beneficial to Edir;on.

The Citien are purnuing participation in projects nach as San Onofre and Palo Verde (but concrary to the fifth San Onofre co n d i t. i o n, relating in part to coordinated pl a n n i ng of t.r a n : ission, Edinon hac thun far refuned to let Citiec oa r t i c i p n t.e in the high voltage linen from Palo Verde to Ca);fornia, o f '. e r i n g en) y to se.11 t.rancmincion er-Vice' to the Citie;).

An ntated, Citien are socking power Cup-pl i e r, in the ':or th ten t (and t.he Southwect).

':c'ae'r e r, Ed i c a n has uned its control over the Intcrtie in a nanner that foreclores Cit.ien fron roon diversifying it, pouer r.ources no as to encap" prenent d tendence en Edison.

An a contequence, Cities are vulnercN e to Ea; on' nrice aquee7e und ould be driven out of buninecn, with I'd i no n taking ovo.

Citien' retail nervice arcac.

The Citien are in oarne-t about their antitruct allegationn aga,nnt Ifiron.

On tR'ch 2,

]978 ? r hei::, Riverside, and othe: S filed an a tti truct suit aga: art cliron.

Anahoin, River ~ide, B'"-

nina, Colten, ana ' u: a, Cal : f c' :. i a v.

Ca):*cr..- ' ': mn c oat v r" Cor p: ny,... S.

f:. : t r : c t Court, Ent' d J1 strict of Cail'ornia, u.-

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On Auguct 31, 197",,

the Court denicd.dison's cotion to din-irs the q u i t., but d,' erred the a c t. i o n c naing three P r :'.C proceedings.

In tuo of the F E P.C proceedin;., ?naheim, Rivernice and othern are rairing t'._

Iccuen of t!.e Intertie, the Californ:a Power Pcol aareement, tne Seven Pa r t y Ag ree:r en t (between the Power Pool r.... m : : and four i n v e s t c r-own e:I uti1itier in Ca1iforn:

the Iorthwest), and related agreements and transactions: FE ;C Docket ';o s. d-7777 (Phace II) and C-7796.

Finally, the Cities have pursueJ the price cqueeze issue in an Edison wholesale rate case, PERC Docket :;o., ER7 6-2 0 5.

Enforcement of the San Onofre conditions would help ame-liorate the antitruct harm t.ow being suffered by Anaheim, Ri /er-side, and othern.

Enforcement would open the way for the Cities to reach economical sources of electricity, thus vindicating the Citien' rights to preference power f rom f ederal sources, their rights to carnece with others for less expensive electricity from whatever cource, and their right to escapa from the price cqueene ir. nosed bv Ed i s o n.

.ihile the D 2 pa r t r.e n t of Justice munt c ro V

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f leeve it to the partjo', to neck a vindicalion of their r i <j h t :

under the a n t. i t. r n n t

],,*a, tho 'an Onof re condiL:or.n resulted froa an ("; r ( ome n t he t ',ee e n !;d i non and the b ' oar t: ten L of Justice f ol l o, ling the Ir. pa r t ae n t ', earlier r c co'.'i:.e rnl a t i o n for an antitrunt hc a ri n.; b/ the ::HC,

..:nd the San Onofre co:..i i t i o n " have lcd the Dep;rt.wnt-ta s u s.;g e n t no further antitrunL hearinj in the Palo Verde p r o c e e 'l i n :j.

In our vic;P, the IKpartaent o[ Justice "hould therefore neeh enforcea nt of t.h e ;an Or.o f re conditions (in a nanner that does not threaten delay of the Pa]o Verde co n s t r u c t. i o n pe riai t or the San Onof t e operating license hecaune a delay vou]d hurt /.naheir., 1:i v e r ';id e, and teon';i bly ot.h e r n ) ; or, thn D e p. r tz:e n t.

choul d ot he nti ce noch enforcenent of t.h e antitruct laws ageinnt 1;dinon.

D"*D Sincerely, Oo m

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W 1! d A _a Alan J.

Ro'ti h

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Att.orney for t.he Ci t. i e n o f I.n ah e i:n and Rivernide, California cc:

Gordon U.

Ho y t.

Utilitien Director Everett C.

Ronn Publ i c [Jt i 3 i t i er. Director o

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