ML19257B559

Discusses Interconnection Agreement Between Util & Gulf States Util to Permit Transaction Between Lafayette,La & Ms Energy Agency Members

ML19257B559
Person / Time
Site:	Grand Gulf
Issue date:	01/11/1980
From:	Mcdiarmid R SPIEGEL & MCDIARMID
To:	Harold Denton Office of Nuclear Reactor Regulation
References
NUDOCS 8001170409
Download: ML19257B559 (12)

Text

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LAW OFFICES GEORGE SPIEGEL P C. SPIEGEL & McDI ARMin BO*4NIE S. BLAIR ROBERT C. MCDI ARMID ROBERT HARLEY BEAR SANDRA J. STREBEL 2600 VIRGINIA AVENUE N.W. THO M A.' C. TRAUG E R ROBERT A JABLON JOHN Me *HAEL ADRAGNA WASHINGTON. D C. 20037 CYNTHIA 3. BOGORAD JAMES N HORWOOD ALAN J. ROTH TELEPHONE (202) 333-4500 G ARY J. % !WELL FR ANCES E. FRANCIS M ARC R. 5 OIRIER DANIEL 1. DAviDSON TELECOPIER (202) 333-2974 M ARTA A. M ANILDI THOMAS N MCHUGH.JR JOSEPH L VAN FiTON DANIEL J. GUTTMAN PETE R K. M ATT ,

DAVID R. STR AUS January 11, 1980 Mr. Harold Denton Director Of fice of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washing ton , D.C . 20555 Donald L. Flexner, Esq. ,

.- 4 Assistant Attorney General 1 / 4 2.10 m <

U.S. Department of Justice iIUO IO7 Washing ton , D.C . 20530 In The Matter of Mississippi Power & '

Light Company, Grand Gulf Nuclear Station Numbers 1 and 2, Docke t Nos. 50-416A and 50-417A. _

Gentlemen:

We are in receipt of a copy of a letter dated December 10, 1979, addressed to you from counsel for Mississippi Power & Light Company ("MP&L"), the Applicant in the above-captioned proceeding. Tha t letter purports to respond to the Department's letter of November 21, 1979, to the Nuclear Regulatory Commission. MP&L's letter represents that Condition 5 (wheeling of culk power) has been satisfied by a settlement agreement entered into in FERC Docket Nos.

ER78-583 and ER78-584. The Municipal Energy Agency of Mississippi ("MEAM") had originally hoped that this would be so. With this in mind , the Cities had accepted the represen-tations of MP&L in the settlement negotiations that Section 50.10 of the Service Schedule E quoted at page 2-3 of MP&L's December 10 letter would, as a practical matter , be used to comply. It may be noted that that Section 50.10 obligates MP&L to transmit from any entity with which MP&L nas an interconnection agreement. MEAM had accepted MP&L's repre-sentation that MP&L would work expeditiously to enter into W

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Mr. Harold Denton Donald L. Flexner, Esq. January 11, 1980 an interconnection agreement with Gulf States Utilities which would permit the trancaction between Laf ayette , Louis ian a ,

and certain of MEAM's members which has oeen stalled for well ,

over a year, to take place on reasonable terms . Un f or tu-nately, however, this belief appears to have been misplaced.

MP&L, in its December 10 letter, argues that nothing in Condition 5 of the construction permit requires MP&L to negotiate with another utility in order to reach an interconnection agreement to benefit MEAM or its members. It may be noted that Condition 5 requires MP&L to transmit from those utilities "to which licensees may be interconnected in the future as well as those that are now interconnected."

(Emphasis added). Condition 5 does not even mention an interconnection agreement, or in any way limit MP&L's obliga-tion to transmit to entities with which it has an intercon-nection agreement. Condition 5 re f e rs to interconnections, rather than interconnection agreements. MP&L has long had and now has an interconnection with Gulf States.

MEAM has long been quite unsure what purpose was supposed to be served by MP&L's insistence that it have an interconnection agreement with Gulf States before it could .

begin to transmit the power which Gulf States has been willing to deliver to it on behalf of MEAM's members. MP&L has inferred to us that there must be a provision for accounting for inadvertent flows, or payment for excess flows , altnough it has never been able to clarify why this should be so.

MP&L, in its December 10 letter, attaches an Oc tober 16, 1979, letter from Norris Stampley, Vice President of MP&L, to Gulf States , asserting that MP&L is willing to execute an agreement with Gulf States. Un fo r tuna tely , the re seems to be some confusion. On November 20, 1979, there was a meeting between MEAM members and MP&L, called to deal with Joint planning for the future. We attach MEAM letters of November 21, and December 20, 1979, and a letter from Mr. Stampley to MEAM of December 4. While those letters reflect a disagreement upon the exact wording of certain con-versations that had transpired, it seems reasonably clear that Mr. Stampley suggested that there was a real possibility that MP&L's affiliate, Louisiana Power & Light, would go to court to block any action which might ultimately oe taken for transmission between Gulf States and MP&L, and suggested further that MEAM should agree to pay UP&L an additional transmission fee, the necessity for wnich we thought we had

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Mr. Harold Denton Donald L. Flexner, Esq. January 11, 1980 eliminated in the settlement at the FERC, rather than wait for MP&L and Gulf States to reach agreement. We attach as well a copy of a letter of December 14, 1979, from A. E.

Naylor, Manager--Power Interconnections for Gulf States Utilities, to Mr. Stampley of MP&L which certainly appears to suggest that MP&L has declined to make available any service schedules to Gulf States in the interconnection agreement which MP&L now asserts it had proposed, apparently a substan-tial change from interconnection agreements previously pro-posed and agreed to by Gulf States.

It also appears from this correspondence that MP&L has proposed to Gulf States an Interconnection Agreement without service schedules, on the assertion that none are needed. If no service schedules are needed, of course, the MEAM view that no interconnection agreement is required for the needed transmission to take place is clearly established as correct. No interconnection agreement could be entered into without service schedules to permit accounting to take place. In sum, it seems that Condition 5 is plainly not yet satisfied.

MP&L's December 10 letter again asserts that Condition 4, access to the Grand Gulf nuclear units, is also '

satisfied. Apparently, MP&L believes that entities which are members of MEAM should agree to pay millions of dollars without any idea whatever of the terms upon which such dollars would be paid or what they would get for it. No offer has yet been made to MEAM, or its members, in spite of continued requests for an offer. While two years , as suggested by MP&L (December 10 letter, p. 5), may be ample time to evaluate an offer of participation and make a firm decision based thereon, the offer which is required must include the terms upon which MP&L proposes to sell and operate that unit, and none of those terms have yet been made known to MEAM.

If MEAM's objections to MP&L's lack of conpliance with Conditions 4 and 5 are resolved, MEAM does not contend that MP&L is otherwise failing to comply with License Condition 2 (Interconnection and Coordination of Reserves),

although MEAM does contend that MP&L has declined to sell power to generating cities within its boundaries at the sane or similar terms and conditions as those that are available to cities that are not generating in competition with it, in violation of Condition 6.

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Mr. Harold Denton Donald L. Flexner, Esq. January 11, 1980 MEAM hopes that it will be possible to resolve these matters expeditiously. Time is running on these matters; the ef fects of the failure of MP&L to comply with .

these Conditions is now significant and appears likely to become more so. We regret to advise you that we believe the Antitrust Division's letter of Movember 21, still to be wholly in point.

Yours very truly,

/

Robert C. McDiarmid Enclosures cc: Troy B. Conner, Jr., Esq.

Frederick Chanania, Esq.

Richard M. Merriman, Esq.

Janet R. Urban, Esq. -

David R. Hunt, Esq.

Mr. Marvin Carraway Mr. C. M. Matthews RCMcD:jbs O

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' Mr. Norris L. Stampley Vice President Mississippi Power & Light Ccmpany P. O . Box 1640 i Jackscn, Mississippi 39205 Cear Norris: ..

l am surprised by a couple of things in your Oecember a letter. ,

-(' As I sV_.As in my letter, we do hope that continued joint planning wi!! be productive, but I am not sure I would describe our November 20 meeting

r. exactly as you have.

More importantly, I understcod you us say that you had given Gulf States an intercennecticn agreement draft wim a transmission service schedule similar to mose you now have wim the Cities and SMEPA. We

' have received a copy of a letter frem Al Naylor to you which seems to state e that you have declined to offer service schedules necessary for an inter-

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c -- connection agreement and declined 'to' transmit for Cuff' States.~- Frankly;-

' I don't see how we or anyone else could enter into an interconnection agreement pursuant to which energy will ficw wimout scme prevision for

.- acccunting and payment. We all mought you had agreed at the FERC settle-

> ment meetings that MPSL would work in good faith toward a rapid interconnection

, agreement with Culf States wnich would permit us to obtain the Lafayette energy and capacity we need withcut running the risk of the contractual and

legal pecblems everybody who deals with~ LPEL seems to wind up with. 1 While you carefully note in your let

Le that you did not state '

mat you had knowledge that LPSL would go to ccurt if we bought power celivered by Culf States to you, ycu certainly left that as a very stecc.g ,

impression at cur meeting of November 20. We do r.ot acpreciate your suggestico hat we had the contractual means of cocaining Lafayette power ${

using the existing contracts of CSU, LPsl and MPSL. If any entanglements with Lost recuire payments of high lawyer fees to ce(end ycur rights tefere ,

you are through, me savings would be eaten up, even if there were savings _

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Mr. Norris L. Stampley Page Two December 20, 1979 after paying the extra, unnecessary transmission charge. In light of LPT,L's '

position, which we understand to be beyorx1 that claimed by anyone else in the Southwest Power Pool area, I think you can understand why none of us wish to get involved in dealings with them.

We certainly would appreciate your clarifying for us the difference in viewpoints appearing in your letter and in tne letter sent you by Al Naylor.

Yours very truly, Marvin L. Carraway Secretary-Treasurer Municipal Energy Agency of Mississippi cc: Mr. C. M. Mathews Vica Chairman - MEAM Mr. Charles Surchfield Ccmmissioner - MEAM Mr. Al Naylor Manager of Planning - CSU

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• 8 EA UM QN ?, TEXA S 77704 A REA COQE 7 1 3 838 6631 December 14, 1979 Mr. N. L. Stampley, Vice President Mississippi Power & LigP Company P. O. Box 1640 Jackson, Mississippi 39205

Dear Norris:

As you are aware, we have been negotiating for months upon an appropriate interconnection agreement between our companies.

Early in the year we exchanged drafts. In May we submitted to you a revised draft which we thought contained the significant changes yau had requested. At that time we tnought the agreement was substantially in final form for execution.

In mid-October you submitted to us a totally new draft of '

a proposed interconnection agreement, stating that it was adapted from one you had recently executed. Since your recent draft is significantly different in important respects from the previous drafts, we have tried to reconcile the differences, hopefully so as to pernit each of us to be consistent with respect to the services we respectively offer.

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? With this in mind, we have taken your draft and made a few fd,.

proposed revisions to it. Attached is a copy of your draft con-ist;. taining our proposed revisions. In the areas in which our respec-N tive positions differ materially or which are not covered in your proposed form of agreement, we suggest that each company incorporate its provisions into its service schedules.

For instance, we have provisions in our interconnection agreements regarding continuity of service and billing and settle-ment which are either not covered by or differ from the provisions in your proposed agreement. We suggest that our standard provisions be incorporated in One GSU service schedules attached to the inter-connection agreement, and you incorporate your standard provisions in your service schedule. This would nopefully allow eacn of us to be consistent in imposing -he same provisions with respect to services offered by each of us within our own service areas. If -

this sounds like an acceptable alternative, please let me know and -

we will promptly submit to you a proposed GSU ransU:issiq.c service 1766"195'

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- Mr. N. L. Stampley December 14, 1979 schedule with our conditions included in it. We will also make the appropriate modifications, as outlined above, to our other service schedules which were included in the May draft. We would expect you to add the billing and settlement provisions which were contained in your interconnection agreement to your service schedules.

We have discussed with you our need for transmission service '

on your system. This letter constitutes our formal request that transmission service be made available to us on substantially the same basis as that we understand you are now offering to others. For this reason, we expect the interconnection agreement at least t; include initially a service senedule providing such transmission service.

Please let us have your comments as soon as possible.

Sincerely, y.1

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Dear Marvin:

Thanks for your le::ar of hovember 21, 1979 which outlined your understanding of sc e matters discussed in our meeting en Ravenber 20. .

I cgree that the Mcvcaber 20 .ceting was productive and we icok for-eard to con:inued joint planning a; ::gether >e seek to 7.c e :

the energy needs of wasturn Mississippi. The meeting was arranged for the specific purpose of join: 01anning for future -

generation addi:icns, ui:h specific reference to our future coal-fired units," and the f r2:evor?. . as laid for :his activi: . ,

In addition to the Ica; ranga genera tica pisaning, you becught up you. the rat:cr of :ransmission of pow.:r fr:: Lafaye::e, Lcuisiana to You are correc: in stating that !?&L is ready to ::ansmit power from our interconnection with Gulf S:ates (GSU) to you as scon ac we executc and 'ile un interconnectien agraecent and CSU advises that ti.sy vill deliver the pcuer to us.

Cur nos: recent suggestion to CSU was ha: :ee sign an intar:onnaction ngree:ent pat:2rned af ter the ene recently entered into with SMEPA, but ta acut any service schedules. Ue have offered to continue negotiations with thcm on a revised agreement eita or without service schedules af ter enecution of such a document. As you stated, we did contact GSU on Cetober 30, 1979 and asked their c00perction in expediting this matter. L.'e again contac:cd them on Novenber 26, 1979 in enis same regard.

I believe ycu have misinterpreted my ccreonts about :he position of 1.PSL relative to power flows from Lafayette to you.

ikw the power f!cus from Lafavette to GSU is no concern of ours.

I d'd state that 1: is y understanding that LPSL believes it vnuld be entitled to renumeration for such transactf ens as they stated in their letter of April 21, 19 7 9 .t o .'r . "a thews . ~

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1. MISSISSIPPI POWER C: LIGHT COMPAfJY ite. Starvin L. Carraway Decccher /., 1979 J Page Two F.ovaver, 1 did not intend to indicate that I had inewledge that thej -ould go to court socking such payment, to speak for the:aceives in thic issue. and LPLL will have I did state that Creenwood and Clar*<: dale had the centractual means of immediately obtaining J

t'.e Lafayette power ucing e::isting centracts of CSU , LP&L and !?SL.

!t is Creem cod and Clarksdale's r.alection to choose a path for

-hich a contract did not but er. i s t , which in itself ccuses a delay, j further.:because

.rn.saission ore, has thosen to ignore the physical use of the L?SL position. contractual path

iight have per :ittad this will deliver to Clarksdale and Creenuced any power deliverrd its system by any entity for th.tt .

of Clarksde.le and Craen.cood's choice, purpose. 'cvertheless, because g

the residents of Clarksdale f:r nany conths (cinca Augustand Greenvoed =0y havee been deprived 23, 1973) with no o'avious benefit s.

's'c look for rard to further joint planning witn the Citice .

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4tCMap0 W wtB STER. Ja.. CLamasoaks Mr. Norris L. Stampley Vice President .. N Mississippi Power k Light Company P . O. Box 1640 Jackson, Mississippi 39205

Dear Norris:

We believe our meeting on Tuesday , November 20, 1979, can prove to be productive and we would like to confirm our understanding of the matters discussed. .

As we discussed with you and your planning staff, we need to resclve whatever problem now prevents our consummating the Lafayette, Louisiana transacdon as scon as possible to be better able to project our require-ments. We understand from your ccmments dat you have had no furter contact with Gulf States Unlines since immediately after our last meeting on October 30, 1979. You informed us that the document that you forwardec. to GSU is similar to the filed SMEPA Agteement, dat you have offered GSU de same transmission serv' ice schedule which has been agreed to by the Cities and SMEPA , and that ycu have agreed to enntinue negotiations with GSU for additicnal ser rice schedules as required. You furter suggested, however , that we should go ahead with Louisiana in the Lafayette transaction since we were just marking time and LPLL intended to go to court to obtain ecmpensaticn if power flowed frem Lafayette to de Cities. We understanc dat, while MPsL is prepared to transmit directly from GSU to de Cities ar.d you have stated your desire to conclude negotiations with GSU , it is your view that LPEL believes it would be entitled to some remunera-tion and would go to coart seeking payment and, derefore, we might be better off stardng the transaction immediately by going ahead and making arrangements with LPtL initially. Gf course, you know our position is and always has been that the Lafa'fette transaction should be accomplished widout an'/i nterference by LPLL. We prefer not to have any centract or other dealings with LP1L in dis transaccon and we want to keep te arrangements as simple as possible rader dan complicated.

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Mr. Norris L. Stampley Page2 November 21, 1979 We certainly appreciate your willingness to supply us with ecpies of the SMEPA Service Schedules and the pardcipation agreement with the under-standing that they would be used as possible patterns for future agreements witn the Cities.

We look forward to our future meetings concerning our joint planning for the future.

Yours very truly ,

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f Marvin L. Carrniay Secretary-Treasurer MLC: .

k cc: Mr. C . M . Mathews , Vice Chairman Mr. Charles Burchfield , Commissioner bc:N Mr. Robert C. McDiarmid Mr, David R. Hunt o

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