ML19289C930
| ML19289C930 | |
| Person / Time | |
|---|---|
| Site: | Summer  |
| Issue date: | 01/15/1979 |
| From: | Leeper C, Morrison H CAHILL, GORDON & REINDEL |
| To: | |
| References | |
| NUDOCS 7901260262 | |
| Download: ML19289C930 (42) | |
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UNITED STATES OF AMERICA 'OSN i NUCLEAR REGULATORY COMMISSION [ g79 7h
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In the Matter of : '
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CO. and
- Docket No. 50-395A SOUTH CAROLINA PUBLIC SERVICE AUTHORI7T :
(Virgil C. Summer Nuclear :
Station)
x SOUTH CAROLINA PUBLIC SERVICE AUTHORITY'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, MOTION FOR
SUMMARY
DISPOSITION RE:
PETITION BY CENTRAL ELECTRIC POWER COOPERATIVE, INC.
Introduction On December 6, 1978 Central Electric Power Coop-erative, Inc. ("Ccutral") filed a document with the Nuclear Regulatory Commission ("Commis sion") in the above-captioned matter styled " Petition for a Finding of Significant Change and Request for Antitrust Hearing on Operating License"
(" Petition") . In response thereto, South Carolina Electric
& Gas Company ("SCE&G") filed a Motion to Dismiss or, in the Alternative, a Motion for Summary Disposition, dated December 21, 1978.
To avoid unnecessarily duplicative pleadings, South Carolina Public Service Authority (" Authority").
7 9 012 6 0 41(p'4(
largely adopts the Statement of Facts and Argument contained in the December 21, 1978 Motion of SCE&G, and to that extent those arguments will not be repeated here. The Authority also submits the following additional matters for considera-tion by the Commission.
Factual Statement The Authority is an agency of the State of South Carolina, empowered to develop the Cooper, Santee and Con-garee Rivers and to generate and sell electricity. (South Carolina Code S 58-31-30). The Authority sells almost one-half of the power and energy that it generates to Central, a rural electric cooperative owned and controlled by South Carolina member distribution electric cooperatives. Vir-tually all of Central's power requirements are supplied by the Authority.
For almost 30 years the Authority and Central have worked together to provide economical power supply for their customers. The Authority and Central have also entered into arrangements whereby Central has financed facilities which have been leased to the Authority, thereby enabling "the Authority more effectively to fulfill one of its statutory objectives of bringing low cost power to the inhabitants of South Carolina. . . ." (Central-Authority "F" Power Con-tract dated April 27, 1970)*
- This contract builds upon previous agreements entered into between Central and the Authority beginning in 1950. While the "F" Power Contract has been amended from time to time, it forms the basic structure of operating agreements between the Authority and Central.
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In order to further provide its customers, in-cluding Central, continued reliable and economic power supply, the Authority has sought and been granted a one-third ownership interest in the Summer Nuclear Unit. Finally, the Authority has informed Central that pursuant to its request, the Authority is willing to negotiate the sale to Central of a share in the Summer Nuclear Unit subject to the resolution of any legal or contractual problems which may exist. While Central's Petition does not state what relief it seeks, the Authority is also anxious to discuss with Central any other claims it may have. It is against this background that the allegations contained in Central's Petition must be assessed.
ARGUMENT I
CENTRAL'S PETITION FAILS TO SATISFY THE COMMISSION'S PLEADING REQUIREMENTS.
The Motion filed by SCE&G thoroughly addresses Central's failure adequately to specify the nature and basis of its claim and these arguments will not be repeated in detail here. (See Motion, pp. 14 -19 ) . . However, Central's efforts to avoid the thrust of t hese arguments and the consequences of its conclusory allegations merit further attention, a
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_4 In its Petition Central expressly requested the Commission to determine: (a) that significant changes in the licensee's activities and proposed activities have occurred subsequent to the antitrust review of the Atomic Energy Commission and the Attorney General at the construc-tion permit stage; (b) that a second antitrust review be conducted by the Attorney General; and (c) that an antitrust hearing be held prior to the grant of the operating license for the Summer facility.
However, by letter dated December 22, 1978, Cen-tral, ostensibly in response to the Authority's December 21, 1978 letter to the Commission, has retreated from its original position in an apparent effort to avoid the pleading require-ments delineated in the Motion of SCE&G and has withdrawn its request for a hearing and its request to intervene except on antitrust grounds.* Thus, while asserting in its letter of December 22 that it was unaware of the April 18, 1977 notice of application for issuance of operating license published in the Federal Register,** Central reasons that:
- On December 21, 1978 SCEGG moved to dismiss the Pe-tition on the yround, inter alia, that Central failed to comply with the Commission's pleading requirements.
'(See 10 C.F.R. S 2.714; Detroit Edison Company (Enrico Fermi Atomic Power Plant, Unit Nc. 2) LBP-78-13, 7 N.R.C. 583, 597 (1978)).
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" Existence of such a notice triggers the requirements of 10 CPR S2.714 which we had not intendea to invoke until after the Commission had ruled on our Petition for a Finding of Significant Change. Accordingly, we wish to withdraw at this time our request for hearing, leaving standing only the request for determination of significant change. Central has no desire to request hearing or to intervene except on antitrust grounds, and will be unable to do so unless the Commission first determines a significant change has oc-curred."*
Central's reasoning is defective in a number of respects. Central concedes that it is seeking to intervene on antitrust grounds and that the existence of the April 18, 1977 notice triggers the pleading requirements of S 2.714.
3 0 C.F.R. S 2.714. But the fact of Central's knowledge of the existence of the notice -- or the absence of such know-ledge -- has no bearing on the applicability of S 2.714, and any suggestion by Central that failure to read the Federal Register emasculates S 2.714 must be disregarded. The fact remains, as recognized in the Fermi proceeding, that:
"Section 2.714 of the Rules of Practice re-quires that a petition to intervene in a Commis-sion proceeding set forth:
'The interest of the petitioner in the proceeding; how that interest may be affected by the proceeding; the~ specific aspects of the subject matter of the proceeding as to which intervcntion is so*_ght; and a peti-tioner's contentions with regard to each of those aspects.'
- Central carefully does not state that it was unaware that application had been made for an operating license for the Summer Nuclear Unit, but only that it was unaware of the specific Federal Register notice. Com-pare Duquesne Light Company et al. (Beaver Valley Power Station, Unit 2), Docket No. 50-412A, ALAB-208, 7 AEC 959, 965-967 (1974), affirmed CLI-74-24, 7 AEC 953 (1974).
"In order for intervention to be granted, the Board designated to rule on the petitions to intervene must find that the petition and its .
contentions satisfy these requirements. Mis-sissippi Power and Light Co. (Grand Gulf Nuclear Station, Units 1 and 2), ALAB-130, 6 AEC 423 (1973); Pacific Gas and Electric Company (S tan-islaus Nuclear Project, Unit 1), 5 NRC 1017, 1021-1025 (1977)."
It is thus clear that S 2.714 is applicable to Central's Petition, and it is equally clear that Central's Petition fails to satisfy the requirements of that Section.
Moreover, the fact that Central has withdrawn its request both for a second antitrust review by the Attorney General and an antitrust hearing does not obviate its obligation to specify with particularity grounds sufficient to invoke the Commission's antitrust jurisdiction. Central has conceded in its letter of December.22, 1978 that it seeks ". . . to intervene . . . on antitrust grounds. . . .
Thus, whether labeled as a petition for a finding of sig-nificant change or as a petition to intervene, Central's Petition expressly seeks to invoke the Commission's anti-trust jurisdiction and therefore must:
, "(1) describe the situation allegedly incon-sistent with the arititrust laws which is the basis for intervention;
"(2) describe how that situation conflicts with the policies underlying the Sherman Act, Clayton Act, or Federal Trade Commission Acts;
" (3) describe how the situation allegedly inconsistent with the antitrust laws would be creat,3 or maintained by activities under the license; and o
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" (4) identify the specific relief sought."
Enrico Fermi, 7 N.R.C. at 597.
These standards must be satisfied whether a petition seeks a determination of "significant changes", or
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requests an antitrust review and hearing, or both, since a finding of "significant changes" automatically triggers the more thorough review of S 105c (1) . Atomic Energy Act of 1954, as amended, 42 U.S.C. S 2135 (c) (1) (the "Act"). Thus this first step -- the Commission's determination as to whether "significant changes" have occurred -- is crucial and cannot be taken unless it is ". . . reasonably clear that there are potential antitrust issues cognizable under S 105." Enrico Fermi, 7 N.R.C. at 595.
It is therefore self-evident that a party seeking
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to raise antitrust iscues at any stage of the Commission's proceeding must state with the particularity those facts which give rise to the antitrust issues under the terms of
'the license as well as a statement of the relief sought.
However, Central's conclusory Petition wholly fails to point up any "significant changes" in the proposed project that have antitrust implications and expressly avoids the ques-tion of relief. Central's December 22, 1978 response with respect to its failure to comply with the Commission's pleading requirements is indicative of its attitude:
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" Central is also criticized for not detailing the relief that it requests. Under existing prac-tice and procedure such specification is inappro-priate until the time for filing a petition to intervene and/or request for hearing afte2: notice.
Should the Commission desire a different pro-cedure, Central would be pleased to suggest li-cense conditions that may be appropriate to cor-rect a situation inconsistent with the antitrust laws under the changed circumstances to which it has referred and indeed to make the entire showing required by the Commission under 10 CFR S2. 714.
It would appear that the more orderly procedure would be to defer the contents of S 2.714 petition until after tha Commission has made its deter-mination that a significant change has occurred and antitrust review is warranted."
Central concedes that it is seeking to intervene on antitrust grounds. Therefore, the time to comply with the Conadssion's pleading requirements is now. By adopting its present murky approach, Central has successfully avoided stating its intentions, cast the Summer licenses under a cloud, and placed the licensees -- SCE&G and the Authority --
in an untenable position before the Commission: we cannot respond with particularity to Central's allegations of signficant changes unless and until Central discloses with particularity the facts supporting its allegations. Central's total abdication of its responsibility to assist the Commission in making the "significant changes" determination compels dismissal of Central's Petition.
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II CENTRAL HAS MADE NO ATTEMPT TO JUSTIFY ITS DELAY.
By any standard, Central's petition is very late.
Central concedes that it knew the facts which form the basis of its allegations in July 1973 and, significantly, does not state that it was unaware of the possibility of proposed service area legislation prior to July 1973.* Assuming arguendo that Central had no knowledge of the proposed service area legislation at the time of the initial anti-trust review at the construction permit stage, Central can hardly be heard to argue that it lacked such knowlef.ge at the time of the proposal to amend the SCE&G construction permit to reflect the Authority's interest in the Summer facility. 39 Fed. Reg. 37088 (October' 17, 1974). It is wel)-settled that a party may intervene on antitrust grounds at the time of a proposed amendment to add new co-owners.
Detroit Edison Company (Enrico Fermi Atomic Power Plan, Unit No. 2) LBP-78-13, 7 N.R.C. 583 (1978). Central chose not to ha set forth in the Affidavit of Mr. Robert S. Davis (copy annexed hereto as Exhibit A), there were 'aeetings in which the service areas for utilities in South Caro-lina were discussed before the date of the initial construction permit. Such meetings were attended by Central's member cooperatives who agreed to and spon-sored legislation enacted in 1969 giving Central's members territorial protection. Under these circum-stances, not only is it astounding that Central would base its antitrust allegations upon the support of, and compliance with legislation, but serious questions are raised as to Central's state of knowledge and that of its member cooperatives at the time of the initial antitrust review.
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raise its antitrust objections at that stage, although all the facts upon which its present Petition is based were then within its possession. Measured from the date on which Central had notice of the proposed amendment (October 17, 1974), its Petition is over four years late.
Moreover, Central makes no effort whatsoever to justify its late filing. This " casual attitude" is akin to that condemned in Duquesne Light Company, et al. (Beaver Valley Power Station, Unit 2), ALAB-208, 7 A.E.C. 959 (1974),
affirmed, CLI-74-24, 7 A.E.C. 953, 967 (1974). Accord, Public Service Company of Indiana (Marble Hill Nuclear Generating Plant, Units 1 and 2), LBP 76-25, 3 N.R.C. 847 (1976). In the former case a petition concerning a con-struction permit, filed two months late, was rejected.
Here, even if tne time to intervene is measured from the time of the notice of application for an operating license, Central's petition is over one year late.
Further, during early 1977 Central asked the Authority whether the latter could " legally get out of the contract with SCE6G "* It can readily be concluded that Central'c failure to make a timely filing was influenced by its uncertainty over the economics of the plant. In ad-dition, in a letter from Central to the Authority
- See January 31, 1977 letter from Robert W. Williams, Jr. to Pat Allen, a copy of which is annexed hereto as Exhibit B.
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P dated July 17, 1978 Central stated "[w] c have been contacted by the Antitrust Division of the Nuclear Reg .atory Com-mission as part of the procedure in issuing an operating license for the Summer Nuclear Plant."* Thus, by mid-July 1978 Central had actual knowledge that the mechanism for the issuance of an operating license was in motion and still waited almost five additional months before making its filing with the Commission.
Under these circumstances, it is imperative that Central's Petition contain assertions as to new facts or other explanatory circumstances in justification of its lateness. Section 2.714 of the Commission's regulations establishes a balancing test under which late applications are to be judged. However, to the extgnt that Central's Petition reveals any facts, all occurred years ago and no justification for the untimeliness of the filing has been provided. Therefore, there is nothing against which to balance the factors supporting dismissal of the late Peti-tion.
In Florida Power & Light Company (S t. Lucie Plant, Unit No. 2), 7 N.R.C. 939, a late petition was granted.
However, in that case, petitioners set forth extensive justification for their lateness, including affidavits that
- See July 17, 1978 letter from Pat Allen to William C.
Mescher, a copy of which is annexe? '1ereto as Exhibit C.
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one of their membert, had been misled into believing that the Applicar.t woula voluntarily grant it future nuclear access.
7 N.R.C. at 942-46.
"A very late petition must present a very strong reason for intervention. And, in evaluating thd good cause element of Section 2.714, boards must bear in mind that NRC antitrust review is antici-patory. Parties who had good reason to suspect, at the time of construction permit appJication, that antitrust abuses likely or possible under a license, should make their claims known at that time." Id. at 947.
Moreover, in the St. Lucie proceeding, the Com-nission gave great weight not only to the seriousness of the allegations, but to the fact that the would be intervenors had specifically waived any claim to delay..ng issuance of the construction permit or operating license. In contrast to the facts in St. Lucie, Central offers no facts to justify its delay and although the Summer plant's projected fuel-loading date is July 1980, Central makes no such waiver.
If a late antitrust hearing is granted and the ordering of the operating license is delayed, a nuclear plant costing hundreds of millions of dollars may be con-structed with its owners unable to operate it, causing great harm to the public's interest in power availability and cost, and possibly jeopardizing or adversely affecting future financ.ing of all nuclear units. Weighed against these considerations is the fact that Central has neither set forth the relief which it cecks nor the harm which will result if its Petition is denied as is required by Section 2.714 of the Commission's regulations.
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III CENTRAL'S PETITION DOES NOT DEMONSTRATE SIGNIFICANT CHANGES AS REQUIRED BY SECTION 105c OF THE ACT BECAUSE THE ALLEGATIONS OF THE PETITION, READ IN THE LIGHT MOST FAVORABLE TO CENTRAL AND TAKEN TO BE TRUE, FAIL TO STATE A CLAIM COGNIZABLE UNDER THE ANTITRUST LAWS.
Section 105 (c) (2) of the Atomic Energy Act pro-vides that there shall be no operating license antitrust review "unless the commission determines such review is advisab;c on the ground that significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous review by the Attorney General and the commission under this subsection in connection with t; e Construction Permit for the f acility. " It is clear that this jurisdictional hurdle was established in recognition of the fact that a second antitrust review should not be granted as a matter of course. To quote the Commission, it would be unfair "to utilities and their investors" should they be
" required to run the antitrust review gauntlet twice. .
. . Houston Lighting and Power Company, (South Texas Project, Units Nos. 1 and 2), 5 N.R.C. 1303, 1321 (1977).*
- In South Texas, supra, the Commission detailed the legislative history underlying the Atomic Energy Act.
It found a congressional concern that possible operat-ing license antitrust review should not be available except where there have been "significant changes".
"I think if you hold over the head of any investor of 100 million dollars in a plant, let us say, the fact that he builds the plant to channel the power into his own system of distribution, at that (construction permit] point he should be made aware of any diversion from that plant to another (Footnote continued on following page.)
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Central's statement of "significant changes" is contained in the first two paragraphs on Page 2 of its Petition. Stripped of its verbiage, it alleges that subsequent to the Attorney General's antitrust review, the results of which were issued on March 31, 1972,* the Authority, SCE&G and other private electric companies " entered into an agreement . . . to restrict their competition in the sale of electric power at wholesale and at retail on and after July 9, 1973 . . . and submitted said agreement to the legislature of the State of South Carolina," seeking legislative immunization of "their otherwise unlawful agreement from operation of the antitrust laws."**
(Footnote continued from preceding page.)
source. Iie should not be put in a position, it seems to me, a double jeopardy in that he is given the construction permit to proceed without anti-trust review and then some six years later, or seven years, his plant is finished, he is faced with an intervenor or a legai situation in which he has to go again through the process of anti-trust review." South Texas, supra, 5 N.R.C. 1315, quoting Chairman IIollifield of the Joint Committee on Atomic Energy.
See 37 Fed. Reg. 7263 (April 12, 1972).
- Central suggests that "significant changes" should be measured from the time of the Attorney General's ini-tial antitrust review in early 1972. Ilo w e v e r , its allegations are based upon activities of the licensees in proposing, supporting and thereafter complying with the 1973 legislation. These facts were known to Central at the cime of the proposal to amend the SCE&G con-struction permit to reflect the Authority's interest in the Summer facility (39 Fed. Reg. 37088, October 17, 1974). Therefore the Commission's determination of "significant changes" shoulel be measured from the date Central had notice of the proposed amendment, and not from the date of the initial antitrust review in 1972.
See discussion pp. 9-10, supra,
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Read in the light most' favorable to Central, this conclusory allegation may be said to state two separate claims for relief. First, the conduct of the Authority and SCE&G (the " licensees"), in formulating and proposing the legislation which culminated in South Carolina Code SS 58-31-310 through 58-31-390, constituted a violation of the antitrust laws. Second, the conduct of the licensees, in restricting the sale of electric power pursuant to the regulatory statute enacted by the South Carolina legis-lature, constitutes a violation of the antitrust laws.
Neither of these claims withstands close scrutiny.*
An initial matter which deserves only a brief reply is Cc;>.ral's implication 'lat the Authority and the pri-vate electric compan' restricted competition in the sale of electrical power by means other than compliance with the South Carolina regulatory statute. However, while it should not be necessary for the Authority to reply to innuendo, to avoid misinterpretation the Authority sets forth the following factual statement:
the Authority neither entered into nor operated under any agreement to restrict the sale of electrical pow-er. The only agreements in effect between the Auth-ority and SCELG are tho~e listed in the SCE&G Motic7 (pp. 25-26). While the Authority did pass a resolution on May 22, 1972 authorizing negotiations toward an agreement with the private electric companies as to service areas, that resolution appropriately stated that any agreements reached were to be subject to review by antitrust counsel. The Authority did not enter into any such agreements, nor were its service areas restricted prior to enactment of the territorial legislation. It is undisputed that the Authority did support the enactment of tha 1973 territorial legis-lation here in issue. South Carolina code S 58-31-310 et seg. However, it is also undisputed that Central, whose members had earlier sought and obtained similar territorial protection in 1969, opposed this legis-lation when it was first introduced, but changed its (Footnote continued on following page.)
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It is well-settled that firms may act together for the purpose of influencing the decisions of public officials or bringing about the passage or enforcement of laws.
Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 91 S.Ct. 523 (1961); United Mine Workers
- v. Pennington, 381 U.S. 657, 85 S.Ct. 1585 (1965). In Noerr, a group of railroads allegedly conspired to restrain and monopolize trade in the long-distance freight business in violation of Sections 1 and 2 of the Sherman Act. The conspiracy was carried out by an intensive publicity cam-paign against truckers, designed to foster adoption and enforcement of laws hostile to the trucking business and favorable to the railroads. The campaign utilized fraudu-lent and unethical practices, including a third party tech-nique desigaed to make the adverse publicity to come from independent parties.
The case went to trial and the railroads were found to have violated the Sherman Act. The judgment was affirmed by the Third Circuit, but the Supreme Court re-versed, holding:
"[T]he Sherman Act does not prohibit two or more persons from associating together in an -
(Footnote continued from preceding page.)
position when the Authority agreed to withdraw its opposition to a provision adding an additional member to the Authority's Board, which member "shall have had experience with rural electric cooperatives." Id., S 58-31-30. (See Affidavit of Robert S. Davis, VV 3-6.)
There was considerable doubt whether the service area legislation in question would have passed without Central's support.
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attempt to persuade the legislature or the execu-tive to take particular action with respect to a law that would produce a restraint or a monoply."
365 U.S. at 136.
This construction of the Sherman act was based on the finding that such combinations,
" bear very little if any resemblance to the com-binations ordinarily characterized by an express or implied agreement or understanding that the participants will jointly give up their trade freedom, or help one another to take away the trade freedoms of others. . . . Id.
The Court concluded that there was an " essential dissimi-larity becween an agreement jointly to sock legislation or law enforcement and the agreements traditionally condemned by Section 1" of the Sherman Act. Id.
Even if such dissimilarity were not sufficient to dispose of the question by itself, the Court reasoned that it was conclusive when considered with other difficulties that would arise from holding that the Sherman Act forbids associations for the purpose of influencing the passage or euftrcement of laws. These "other difficulties" were the impalintent of the power of Government to make adequctely informed decisions based on the wishes of the people, and the impairment of individuals' rights to petition as pro-tected by the Bill of Rights.
The court found that the railroads' goal was to influence legislators in orde* to obtain legislation favor-able to the railroads and unfavorable to trucking firms.
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The fact that the truckers did suffer some damage in their business relationships was an incidental effect of the railroads' campaign to influence governmental action. That the railroad may have been hopeful that such injury would occur was of no import. Their intent clearly was to in-fluence the passage of legislation and such activity cannot form the basis of a Sherman Act violation.
In Fennington, a cross-claim alleging violations of Sections 1 and 2 of the Sherman Act was at issue. It was alleged that the United Mine Workers Union (UMW) and certain large coal operators had conspired to impose agreed-upon wage and royalty scales throughout the industry, in order to drive smaller operators, who were unable to pay such wages and royalties, out of business. As part of this conspiracy, the parties induced the Secretary of Labor to set a minimum wage for employees of contractors selling coat to TVA, which was higher than in other industries and which the large companies could pay but the smaller ones could not.
The trial court had instructed the jury that if the jury determined the requisite anticompetitive purpose was present, it was free to find an illegal conspiracy based on the TVA episodes. The Supreme Court held that such an instruction was erroneous:
" Joint efforts to influence public officials do not violate the antitrust laws even though in-tended to eliminate competition. Such conduct is not illegal, either standing alone or ar part of a broader scheme itself violative of the Sherman Act." 381 U.S. at 670.
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4 The principals embraced in Noorr and Pennington are applicable even in the situation, not present here, where legislative action is sought by competitors for the express purpose of injuring the business of another. Ac-cordingly, the applicability of the Noerr-Pennington doc-trine is even more compelling where, as in the instant case, the legislative purpose was to benefit the citizens of the State of South Carolina, and was enacted only after careful deliberation by the South Carolina legislature.* In short, Central's Petition cannot rely for support upon the joint efforts of the licensees in proposing the encouraging passage of the 1973 legislation as such conduct does not give rise to a cognizable claim under the antitrust laws.
As the licensees' conduct prior to the passage of the 1973 legislation cannot serve as a basis for the relief sought by Central, the Petition must stand or fall upon an analysis of the licensees' activities subsequent to July 9, 1973, the date on which the legislation was enacted. Yet Central's apparent suggestion that the licensees ran afoul
- It is noteworthy that Central ultimately supported passage of the legislation, and that Central's member cooperatives had obtained almost identical terri-torial legislation only four years earlier. See Affidavic of Robert S. Davis, SV 5-6.
of the antitrc.st laws in restricting their business acti-vities in conformance with the 1973 legislation is equally unpersuasive. While the legislation imposes restraints upon the territories in which the Authority and the private electric companies may operate, such restraints, arising out of compliance with South Carolina law, cannot be challenged as violative of the antitrust laws. Parker v. Brown, 317 U.S. 338, 63 S. Ct. 307 (1943).
Parker v. Brown was a suit by a producer and packer of raisins to enjoin the enforcement of an agricul-tural proration program specifically designed to restrict competition and to maintain prices and thus substitute agricultural regulation for free market competition. 317 U.S. at 346. The program was established pursuant to the California Agricultural Prorate Act which provided for such programs as a means of eliminating the " economic waste"
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purportedly caused by the unrestricted marketing of various overabundant agricultural commodities. 317 U.S. at 346.
The plaintiff claimed that the sta'te program was preempted by the Sherman Act and the Agricultural Marketing Agreement Act (50 Stat. 246, as amended, 7 U.S.C. 601, et seq.) and that it impermissibly burdened interstate commerce.
Participation in the state agricultural program was mandatory, and the statute provided criminal penalties for noncompliance. Further, even though organization of a prorate marketing plan was first proposed by private parties (i.e., the producers), and although the producers had to
approve the prorate program by referendum, the State Ag-ricultural Prorate Advisory Commission had the final auth-ority to revise, modify, reject or approve proration pro-grams. This Commission consisted of the Director of Agri-culture, six producers of different agricultural commodi-ties, one consumer representative and one commercial handler of produce.
Concluding that the state program was state action to which the Sherman Act we.s not intended by Congress to apply, the Supreme Court emphasized the clear and active r)le of the state in creating and supervising the marketing scheme: the program " derived its authority and its efficacy from the legislative command of the state and was not in-tended to operate or become effective without that command."
317 U.S. at 350. The Court continued:
"Here the state command to the Commission and to the program committee of the California Prorate Act is not rendered unlawful by the Sherman Act since, in view of the latter's words and history, it must be taken to be a prohibition of individual and not state action. It is the state which has created the machinery for establishing the prorate program. Although the_ organization of a prorate zone is proposed by producers, and a prorate program, approved by the Commission, must also be approved by referendum of producers, it is the state, acting through the Commission, which adopts the program and which enfotces it with penal sanctions, in the execution of a governmental policy. The prerequisite approval of the program upon referendum by a prescribed number of pro-ducers is not the imposition by them of their will upon the minority by force of agreement or com-bination which the Sherman Act prohibits. The state itself exercises its legislative authority in making the regulation and in prescribing the corditions of its application. The required vote on the referendum is one of these conditions."
317 U.S. at 352.
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t Viewing the allegations of the Petition in the light most favorable to Central, it is apparent that any anticompetitive restraints imposed upon the licensees' conduct by the 1973 legislation are immune from attack under the Parker doctrine. As in Parker, the allocation of ser-vice areas among the Authority and the investc_-owned uti-lities ". . . derived its authority and its efficacy from the legislative command of the state and was not intended to operate or become effective without that command. . . .
317 U.S. at 350'. Moreover, " [i] t is the state which has created the machinery for establishing the [ service areas].
. . . The state . . . adopt [ed] and enforce [d] the [ allo-cation of service areas] . . . [and:) as sovereign imposed the restraint as an act of government. . . . Id. at 352.
Central has raised no circumstances which warrant a finding that the restraints imposed by the 1973 legis-lation fall outside the scope of the Parker doctrine.
Moreover, it is unlikely that Central is able, much less willing, to do so.*
- As has been stated above, Central's members sought, and are operating under similar restrictions imposed by legislation enacted in South Carolina in 1969. South Carolina Code 58-27-610 through 58-27-E70. Moreover, it is the established policy of Central to support such legislation:
" Power supply entities, like other human institu-tions and like humans themselves, are territorial in nature. This principle of territoriality yearns for, if indeed it does not demand, two vi-tal elements -- geographic definition and physical properties. It is by no means an abstract prin-(Footnote continued on following page.)
Significantly, and perhaps dispositive of the question, the Attorney General has recognized that the restraints imposed by South Carolina law are immune from attack on antitrust grounds. In response to the Commis-sion's request for antitrust advice at the construction permit stage, the Attorney General had occasion to assess the impact of the 1969 South Carolina legislation imposing restraints upon the rights of investor-owned utilities and cooperatives to territorial service areas outside munici-palities:
"With the comparatively large number of dis-tribution coops scattered throughout SCEG's ser-vice area, there has been considerable scope for retail competition in the past. This will be seriously curtailed in future, but only as a re-sult of the change in South Carolina law." 37 Fed. Reg. at 7266. (April 12, 1972) (Emphasis added).
Obviously the Attorney General would have expressed his ob-jections, and recommended an antitrust hearing, had he concluded such territorial restrictions were subject to the (Footnote continued from preceding page.)
ciple; it does not inhere in the mere " nature" of public service corporation psychology. Rather, it flows from a simple and fairly obvious truism: The right to serve commands the duty to serve; the duty to serve deserves the right to serve; and the right and duty to serve may not safely be sub-delegated to oth-ers; therefore, a power supply territory, defined generally by the configuration of its own properties and the properties of its constituent vendee systems, which systems have a right to demand -- and to which systems the power supply entity has a duty to fur-nish -- bluk power service." Central Electric Pouer Cooperative, Inc., " Objectives, Principles, Goals and Policies for Long-Range Consideration," p. 2, August 12, 1976 (copy annexed hereto as Exhibit D).
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proscriptions of the antitrust laws. The absence of such objections is clearly attributable to the Attornay General's recognition that the principles embraced in Parker are con-trolling. In summary, it is submitted that Central's con-cluscry allegations of antitrust violations do not withstand even the most cursory review.
However, an additional, independent ground exists which compels dismissal of Central's claims. The antitrust jurisdiction of the Commission is specific rather than general. The relevant provision of the Atomic Energy Act of 1954 evidences that Congress bestowed antitrust jurisdiction upon the Commission only to the extent necessary to insure that ". . . activities under the license [do not] create or maintain a situation inconsistent with~the antitrust laws. .
. . 42 U.S.C. S 2135 (c) . The Appeal Board has recognized in the Enrico Fermi proceeding that the Commission's anti-trust jurisdiction has been circumscribed so that antitrust contentions must be reasonably related to activities under a proposed license:
" Petitioner seeks to invoke the Commission's anti-trust jurisdiction. That jurisdiction is not plenary, however; the Commission's writ to enforce the antitrust laws does not run to the electric utility industry generally. Neither does it reach all actions by utilities that generate electricity with nuclear-powered facilities. Rather, Congress authorized this Commission to condition nuclear power plant licenses on antitrust grounds only where necessary to insure that the activities so licensed would neither create nor maintain situa-tions inconsistant with the antitrust laws. The reason for the grant, as the Commission has ex-plained, was 'a basic Congressional concern over access to power produced by nuclear facilities' D
because the industry was nurtured by public funds and the legislaturc was anxious that nuclear power
'not be permitted to develop into a private mono-poly via the [NRC] licensing process'. Put another way, the preservation and encouragement of competition in the electric power industry through ' fair access to nuclear power' is the prin-cipal motivating consideration underlying section 105c of the Atomic Energy Act." ALAB-475, 7 N.R.C.
at . (Emphasis added).
Nothing in Central's Petition brings its allega-tions within the scope of interests which the Commission's antitrust jurisdiction was designed to protect. Central does not allege that it has been denied reasonable access to nuclear power. Nor could it make such an allegation in good faith as the Authority has offered to sell Central an in-terest in the Summer unit. Central's general allegations such as " unlawful agreerent" are not sufficient to call into play the Commission's antitrust powers'in the absence of evidence of the specific injury -- denial of access to nuclear power -- which such powers were established to prevent. Ac-cordingly, Central's Petition must be. dismissed for failure to state a claim cognizable under the antitrust laws.*
Central makes the passing reference on.page 4 of its Petition to the Authority's ' dual rates," which al-legedly " unfairly restrain Central's members from competing for . . . large power loads." Provisions for separate service is found in Section 9 of the Santee Cooper-Central "F" Power Contract, dated April 27, 1970, although such terms find their origin in earlier agreements between Central and the Authority which have been approved by the Rural Electric Administration.
Central indicates dissatisfaction with the "F" Power Contract. While the Authority is not certain of the relevance of this contract to Central's petition, and Central nowhere makes it clear, the Authority views (Footnote continued on following page.)
o
Conclusion For all of the reasons set forth herein, Central's Petition should be denied.
Respectfully submitted, CAHILL GORDON & REINDEL 0ADA%
~
n-4AA -
Ilugh IP. Morri' son, Jr.
i (I
Of Counsel: at ) wp&
Charles S. Leeper Wallace S. Murphy
&Y M/ s ingto .C BOO 6 df5^ (202) 659-3030 Counsel for the Licensee Dated: January 15, 1979 .
the "F" Power Contract as highly favorable to Central.
Under the "F" Power Contract, Central pays less than the Authority's allocated costs to serve Central.
However, the Authority is not ebligated to serve new loads of more than 2,500 kw, although it is obligated to "make all reasonable efforts to increase its power supply to meet [such] anticipated loads." In the Authority's view, what Central is complaining about is that the Authority is not obligated to sell.it power and energy for large new loads requiring large new investments at less than fairly allocated costs. The Authority will, of course, do all it can to provide service for any of Central's loads at rates reflecting their costs. Moreover if Central 9esires to be served on a strict cost-of-service basis instead of the "F" Power Contract, the Authority has no objection.
o
I ,* b ' ' EXHIBIT A STATE OF SOUTH CAROLINA )
AFFIDAVIT COUNTY OF RICHLAND 1 PERSONALLY APPEARED before me ROBERT S. DAVIS, who, being duly sworn, does depose and declare:
(1) I am Chairman of the South Carolina Public Service Autho-rity. I was appointed to the Authority's Board of Directors on April 25, 1968 and was appointed Chaiman on July 22, 1969. I resigned as Chairman effective June 30, 1974 and was again appointed Chairman on May 20, 1976.
I am familiar with all agreements between the Authority and other electric utilities entered into during my service with the Authority.
(2) I have read a copy of the document filed by Central Electric Power Cooperative, Inc. (" Central") entitled " Petition for a Finding of Significant Change and Request for Antitrust Hearing on Operating License" dated December 6,1978 (the " Petition"), and filed with the Nuclear Regu-latory Comission ("NRC") in Docket No. 50-395A, with respect to the V. C.
Summer Nuclear Station, Unit. No.1.
(3) I have read the allegations 09 Page 2 of the Petition which allege tcat South Carolina Public Service Authority entered into an agree-ment with South Carolina Electric and Gas Co. and other private electric companies operating in South Carolina to restrict competition in the sale -
of electric power at wholesale and retail on and after July 9,1973. No such agreement exists now or ever existed.
(4) On May 22, 1972, the Authority's Board of Directors adopted a resolution authorizing negotiations with South Carolina Electric and Gas Company, Duke Power Company and Carolina Power and Light Company with res-pect 'o service territories, joint use of rights-of-way, Summer Nuclear
, s
a Station and headwater benefits. That resolution clearly stated that any agreement between the Authority and the investor owned utilities would be submitted to Bond Counsel and R. W. Beck and Associates (consulting engi-neers) prior to being given Board approval, "to determine that such agree-ment confoms to the requirements of the Authority's Trust Indentures and Bond Resolution, existing statutes, antitrust laws and any other valid agreements or regulations under which the Authority operates". On the advice of our antitrust counsel, the Authority did not enter into any such agrecment r.or did it ever act pursuant to any such agreement or restrict its competition in the sale of electric power before authorized and directed to do so by Act l'o. 412 of 1973.
(5) In the late 1960's the electric cooperatives of South Caro-lina, including the members of Central, negotiated with the investor owned electric utilities operating in the State with a view toward dividing the State into areas that would constitute exclusive territories for the co-operatives vis-a-vis the investor owned utilities. These negotiations resultad in the enactment of a so-called " territories bill" (Act tio. 432 of 1969) now codified as Code of Laws of South Carolina, ~ 976, as amended Sections 58-27-610 through 58-27-670.
(6) Central opposed the passage ~of the bill to grant the Autho-rity an exclusive service area as such bill was introduced in the General Assembly of South Carolina in 1973. Central withdrew its opposition as a result of an amendment to the bill, proposed by Central, which added an additional member to the Authority's Board of Directors, which member must be one who has had experience with rural electric cooperatives. It is doubtful that the bill would have passed without Central's ultimate support.
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(7) The Authority sells power and energy to Central under a long term contract (the F Power Contract). The prices paid by Central under this contract fall far short of equalling Central's fully allocated costs. The Authority has been in almost constant negotiations and dis-cussions with Central for several years and a number of adjustments to the contract have been made from time to time. To the extent that Cen-tral objects to the pricing provisions of the F Power Contract, the Autho-rity is willing to amend that contract so as to price all power and energj sold to Centrcl on the basis of strict cost of service principles common to the electrical industry.
(8) The date of July 9,1973 referred to in the Petition is meaningful to me only as the date on which the Governor of South Carolina approved Act l'o. 412 of 1973 which granted the Authority an exclusive ser-vice area vis-a-vis the investor owned electric utilities.
%)f.d_. b n~
ROBERT S. DAVIS SWORfl to before me this M k .
day of January,1979.
L \ h k.
' liotary Public For South Carolina My Comission Expires:kD'$
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... ~
EXIIIBIT B-F, ~ ' N Cen ra E2afc ~baerCcoperaive.
1
[- - no.
P.O. Box 1455/121 Greystone Boulevard /Colornbia. S.C. 29202/(803)779-4375 January 31, 1977 '-
Robert W. Williams. Jr.
~* '
owemsc
.. John C. Anderson Mr. Pat Allen R.EC EIVED Tj;l,yg Executive Vice President and General Marnger FEB'1 1917 rom B.s Aw r2 ,,
Central Electric Power Cooperative, Inc.
"'""*8' Post Office Box 1455 E C
,}.; y, E. V. Lewis u c.,
Columbia, South Carolina 29202 ,
m C.
Dear Pat:
Enclosed you will find copy of the revised February 19,.1976 Summer Project Cost Analysis Sheet that was furnished to us by Bill Williams of the South Carolina Public Service Authority. On this sheet you will note that the estimated revised project cost was
$492,623,000 and that a projected cost of $547 per kilowatt for the SCE&G and $732 per kilowatt for the Authority is shown.
Mr. Summer of SCEEG gave a revised cost estimate figure of
$635 million, which is a 297. increase.over twelve months.
. I believe that it would be prudent for you to obtain from the SCPSA an update on the revised cost analysis an'd breakdown of each item in the budget. Since they went to t! ~2 trouble to give us a PR briefing,
' I also believe that it would be responsive on our part to ask the Authe.~ity whether or not they can lega"y get out of the contract with the SCELG and if not, why, and also c antinue to ask questions on what the cost is going to be on a per kilowatt hour basis. It should be mandatory on the part of the Authority to get some type of estimate on the cost for capacity and energy from SCE&G which SCEEG would furnish during the one year delay before bringing this plant on line, it is my opinion that the Board would appreciate a comprehensive report on this at our mes . board meeting.
Since ely,
\ '
'!V ob ' t W. Williams, Jr.
Enclosure Pr si fent
( ~
t CenTa ecrb bwrCccoea-iva no P.O. Box 145s/121 Greystone Boulevard / Columbia, S.C. 29202/(603)779-4975
{
Robert W. Wimams, Jr.
o.,.E5*/E
.rf[ ' ' '{
'[/* . '.I1 wi John C. Anderson July 17, 1978 r.w: I LF v g .g JUL 13 Io,2
- ,, .a Robert D. Awbrey -
- (( (,, 1.f ' '.mu1T ,
u,,,,.M'I'd Mr. William C. Mescher, President SMITEE C00RR P. T. Allen S. C. Public Service Authority 223 N. Live Oak Drive -
(%'J.*,'O,'J,7 Moncks Corner, S. C. 29461 -
Dear Bill:
, We have been contacted by the enti-trust division of the fluclear Regulatory Commission as part of the procedure in issuing an operating license for the Summer fluclear Plant.
During some of the discussions, NRC has asked questions which have to do with the Central / Santee Cooper relationship as well as ex-planations of any benefits which Central might receive as a result of the nuclear addition at Summer.
Bill, we certainly have no great desire to hold up the operding license for this plant; however, it does not appear to us that, other o than simply the addition of generation to the intergrated system, Y that Central will benefit at all as a result of this plant coming on line; unless, of course, Central agrees to what now appears to be an otherwise unacceptable proposal from Santee Cooper for new contract terms. We would, therefore, request your consideration on one or both of the following courses of action.
- 1. That Central's fuel adjustment clause be altered to include nuclear power production independent of other contract considerations;
- 2. That Central be allowed to purchase its' representative share of the capacity of this plant. .
Since time is of the essence in concluding these matters, we would
- appreciate your thoughts on these ma.tters prior to August 2, 1978.
,Very..truly yours,
.J 9 P. T. Allen Executive Vice President and General Manager sLd
, A EXHIBIT D CENTRAL ELECTRIC POWER COOPERATIVE, INC.
121 Greystone Boulevard, P. O. Box 1455 Columbia, South Carolina 29202 Objectives, Principles, Goals and Policies for Long-Range Consideration August 12, 1976 DEFINITIONS Four words used herein -- obj ectives, principles, goals and policies -- consistent with basic management nomenclature, are defined as follows:
Objectiit's -- These are the more or less ultimate, and therefore constant and continuous, purposes an organization wants to accomplish.
Sometimes they are differentiated into primary and secondary purposes to establish levels of priority. We shall not do that here; rather, the primary purposes only shall be set forth in one cardinal objective.
Principles -- These are an organization's idealogical, ethical and socio-economic-political views and standards which underly, and are consistent with, the organizations' policies, goals and objectives. In a sense, they constitute the moral rationale -- the "why it is right" sinew -- for the organization's ideals and belie'fs.
Goals -- These are intermediate and measurable achievement levels supportive of attaining the organization's objectives. .
Policies -- There are an organization's adopted dis-ciplines for reaching goals and attaining objectives; they are "the rules of the game,"
so calculated as to guide and direct management in treating with recurring situations of like or similar kind.
'q ..
OBJECTIVES The primary Objectives of Central are as set forth following:
To furnish its constituent member systems with their total bulk power supply requirements, including any Federally generated power available at comparatively low cost via a dependable and secure arrangement; to furnish such requirements at the times and in the locales needed by its members; and to furnish such requirements at the lowest cost "7nsistent with (1) sound business principles on a c,. perative and (legally) non profit basis, and (2) adequacy and reliability of supply.
PRINCIPLES The corollary 1-rinciples bearing on the primary Objectives and related Goals and Policies are as follows:
We Believe That:
- 1. Power supply entities, like other human institutions -
and like humans themselves, are territorial in nature.
This principle of territoriality yearns for, if indeed it does not demand, two vital elements --
geographic definition and physical properties. It is -
by no means an abstract principle; it does not inhere in the mere " nature" of public service corporation psychology. Rather, it flows from a simple and fairly obvious truism: The right to serve commands the duty
(
' to serve; the duty to serve deserves the right to serve; and the right and duty to serve may not safely be sub-delegated to others; therefore, a power supply entity must have a more or- less dependable service territory, defined generally by the configuration of its own properties and the properties of its con-stituent vendee systems, which systems have a right to demand -- and to which systems the power supply entity has a dut" to furnish -- bulk power service.
- 2. The right and duty of furnishing bulk power service ~~
by an organization such as Central require respect for and obedience to several related considerations, all of which are of cardinal importance, although some are more important than others. These are:
A. Control of the organization by its constituent vendee systems on an equal, democratic, per capita basis.
B. Control, consistent with its interests, by the organization in any joint system arrangement with one or more other entities.
C. Cost of service. .
D. " Postage stamp" power rates and service rules and regulations.
E. Adequacy and dependability of service, including assurance of future supply responsive to increased future demands.
- 3. While all five of the considerations set forth in Principle No. 2 are of cardinal importance, they should nevertheless be ranked in order of priority so as to establish clearly the areas of choice and rejection wherever and whenever such choice and rejection must be made. Accordingly, p?;iority levels are:
First Level 2A Second Level 2 B and 2 E Third Level 2 C and 2 D However, as between 2 C and 2 D, 2 D should prevail.
- 4. Notwithstanding priority differentiation of the fore-going five considerations, no such differentiation should be indulged unless, and except to the extent that, the necessity for so doing is imposed by forces external to and beyond the' control of the power supply organization. Stated positively, the organization should exert maximum effort to the end of realizing all five considerations in optimum degree, in balance with one anot'aer, and in long-range harmony of relationshios.
- 5. Principles 2 and 4 foregoing may best be honored if the organization can achieve and maintain the some-what paradoxical status of (a) having a securely fixed and dependable system or arrangement, or both, for adequate and reliable service, consistent with (b) retaining flexibility such that it may choose among two or more alternatives for power supply
resources and arrangements. The organization's all-requirements commitment' to its constituent systems must not, of course, be impaired or diluted; however, its all-requirements commitment from any other bulk supply source should, ideally, be such that this status can be maintained and defended, both in practice -
and legally.
POLICIES Certain policies for Central, as set forth following are appropriate as the most basic Policies relating to Central's bulk power supply role:
Policy No. 1 Central should pursue such courses of action as are consonant with its attaining and thereaf br maintaining the status of owning all generation, transmission and related facilities necessary for supplying, with adequate reserves, the total bulk power supply requirements of its member systems, except (a) to the extent that lower-cost Federal power is available to it or its member systems in a secure and dependable arrangement, and (b) when, as in 1976 and prior years, it has via contractual arrangements integrated or semi-integrated its facilities with those of another power supplier, in which event it t should ronetheless own such facilities in the same pro- -
portion chat its load b ars to the total load of the two entities combined, and should be an active and vital
' participant in the planning processes respecting decisions that affect itself or both entities.
Policy No. 2' Pending attainment of the ultimate goal stated in Policy No. 1, Central should, with respect to all interim arrangements, take care to avoid making commitments which, assuredly or probably, will permanently preclude its l attainment of that ultimate goal. On the contrary, it should use its best efforts to " evolve" existing arrange-ments so as to make them conduce to that goal's attainment.
Policy No. 3 Periodic if not continuous legal, engineering, economic and other necessary studies should be undertaken by Central with respect to each, and viable combinations, of
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the following: (1) joint power supply arrangements with other entities, including power companies, other coopera-tive G & Ts, municipalities and SEPA; (2) recapture of foregone entitlements to capacity and other benefits from the accessible SEPA-marketed projects; (3) promotion of additional feasible, low-cost Federal hydro-electric projects; (4 ) new " source" sources of electric energy; and (5) legislative, regulatory and case law supportive of a r. ore viable legal environment in which Central may exist and function.
GOALS Among other functions, Goals tell management what it should undertake now and hope to accomplisa within a finite future period. Unless otherwise qualified, it is hoped that the time stricture for achievement of the Goals herein stated will be not more than one year, keeping in mind, however, that for most of them the sooner the better.
Goal No. 1 .
Creation of a standing Committee on Objectives, Principles, Policies and Goals, devolved with the authority and re-sponsibility for developing and recommending, and from time to time reviewing and revising, comprehensive primary and secondary Objectives for Central and related Principles,
. Policies and Goals. This Committee should be made up of representatives from Central's other several standing committees and should be invested with authority to call upon the services of Central's management staff, its professional consultants and others, as it deems appropriate, in the conduct of its activities. It should report quarterly to the board of directors until its initial, comprehensive task is completed, and then periodically, at least annually, thereafter. It should be clearly understood that the Committee has only study, report, advisory and recommending powers, not executive decision-making authority.
Goal No. 2 Accord, in writing and on a contracted basis, with the South Carolina Public Service Authority should be reached so as to enable Central to effectuate the following:
. N *-
A. Ownership of generating, transmission and related bulk power supply facilities on a per-dollar-of-investment basis in the proportion that Central's load bears to the sum of its and the Authority's remaining load.
(1) This ratio of ownership should be sought with respect to generation and transmission facilities each, except that Central's SEPA entitlement should be counted as generation owned by it.
(2) At the very least, this ownership concept should be honored with respect to transmission and related facilities that are either wholly devoted to Central's load or which would not be con- .
structed at all, or at any time, except for Central's load.
(3) If its necessary as the " price" for such a concept to be honored, Central should be prepared not only to finance, construct and own, but to operate and maintain, those of such facilities as may be so operated and maintained separately and apart from, but in coordination with, the operation and maintenance of the remaining semi-integrated systems of the parties. A requisite for the ability of paying this " price" is a firm and continuing agreement with the Authority for interconnections and wheeling arrangements. As to facilities which cannot be so scparately operated and maintained (generation facilities and transmission facilities serving the bulk
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power needs of the semi-integrated systems combined and on a co-mingled basis , appropriate operating agreements would be calle}d for with the Authority, although a' leasing of the subject facilities to the Authority would not be, per se, in conflict with'this Goal. An operating agreeZ ment could call for Central to operate a facility on behalf of both parties just as it could call for the Authority to perform this service.
B. Participation as an equal partner with the Authority in salient aspects of the decision-making process.
(1) A true precept of joint and co-equal r.artnership should be contracted by the parties, with each having one vote, with respect to all major planning decisions, and with respect to all major policy and procedural decisions related to operations and maintenance, which affect Central alone or both parties.
(2) Such an agreement should provide for arbitration pursuant to South Carolina law (with or without -
right of appeal, assuming that option is legally availing) in the event of impasse.
(3) An important function of such a continuing partnership relationship would be the timely furnishing by the parties, each to the other as appropriate, of planning information, i.e., load projections, load curves, etc. (This function should be targeted whether in fact the partnership relationship ever comes into baing.)
(4) The partnership relationship should be so established that the parties' joint or respective activities do not assume the legal status.of an actual partnership or a joint venture.
C. Not inconsistent with A above, rates to be charged for bulk power service from the Authority should, among other things, take into account not only the lower cost of facilities heretofore financed by Central but the higher (than the Authority's otherwise) cost neces-sitated in honoring the aforestated concept of ownership by Central. However, rates should also be so set as to give recognition to the following identifiable benefits that flow from the partnership concept and reality:
(1) The Authority, as well as Central, continues to enjoy the benefit of Central's lower-cost capital that has fintaced substantial portions of the existing system (including, fortuitously, ;
an $8.6 million loan at 5% interest which has been >
approved but not yet consummated). (While the imbedded effect of these may be, and presumably will continue to be, decreasing, they neverthe-less are tangible benefits of substantial import.)
(2) With and through Central, the Authority has all of the many important but intangible benefits of a true partner relationship - 'as opposed to dependence in substantial degree upon hostile power companies and their arbitrary, recalcitrant, punitive and predatory policies, philosophy and attitude.
(3) With Central's load (about 50% of the total now, but growing faster than the Authority's retail and other wholesale loads) the Authority gains 4
'.- ?- .
economies of scale vis a vis the generation and transmission facilities that it or Central constructs.
(4) The Authority has the right to use excess capacity in Central's facilities, and to interconnect for reliability and otherwise with those facilities.
(5) In substantial degree (given continuation and pervasion of partnership philosophies), the Authority's and Central's political, legislative and public policy perspectives are identical, or are sufficiently simi.'2r, so as to, in most instances, f.ve i
each the strength that comes from suppor. from the other.
(6) Central's power requirements lend great long-range strength, stability and feasibility to both parties' planning and financial dependability.
(7) The Authority has the right to purchase Central's leased facilities simply by electing to pay off the indebtedness related to them, though Central will have actually paid for these facilities up to two times or more.
(8) Though some conflicts remain to be cleared up, the Authority, with Central's blessing, has achieved a substantial degree of territorial integrity.
Notwithstanding the foregoing, until Central attains the true substantative partnership status and role contemplated by this statement of Objectives, Principles, Goals and Policies, rates charged by the Authority to Central should be based upon a parity concept -- that is, the level of rates to Central should be such that, in relation to the rates charged by the Authority to its retail customers, Central's constituent cooperative fr._
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systems will have a realistic ability to compete for service to new electric loads.
D. The Authority's commitment to supply Central's re-quirements should be clearly and firmly established, one way or the other. (In any ev.ent, of course, the SEPA supply going to Central's constituent systems should not be included in this commitment.) To the extent practically and legally possible, Central should obtain a firm all-requirements commitment, reserving,
-- , ,.~ , .,.-. _ . _ .. . .
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however, subject to reasonable conditions, the right to generate or otherwise acquire supplemental supply where such alternative is availing and desirable.
E. Central's right to recapture facilities subject to the Authority's lease-acquisition agreement should not only be preserved and protected, but expanded if at all possible.
Goal No. 3 Study and active pursuit of alternati, and supplemental bulk power supply arrangements with others than the Authority.
A. The nature of the studies should be economic and financial, technological and engineering, legal and legislative, and political -- in the minimum.
B. The scope of the studies should be carefully delineated but should include possible arrangements with one or more of the following:
(1) Other cooperative-owned G & Ts; (2) Municipal systems or joint municipal agencies; (3) SEPA, including particularly the possibility of recapturing initially foregone capacity entitlements; and
, (4) Power companies.
Goal No. 4 Promotional and other support should be given to the following:
A. Completion of presently planned and authorized Federal hydroelectric projects accessible to Central; B. Study, recommendation and authorization of additional such projects within feasible proximity to Central; C. Development of new-type raw sources of electric energy; and D. Legislative, regulatory and case law supportive of the most viable legal environment in which Central may exist and burgeon.
4
. UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
_________________x In the Matter of :
SOUTH CAROLINA ELECTRIC & GAS :
CO. and
- Docket No. 50-395A SOUTH CAROLINA PUBLIC SERVICE AUTHORITY :
(Virgil C. Summer Nuclear :
Station)
_________________x CERTIFICATE OF SERVICE I hereby certify that copies of the following document in the captioned matter, have been served upon the following by deposit in the United States mail this 15th day of Ja.uary, 1979: " South Carolina Public Service Authority's Mucion to Dismiss or, in the Alternative, Motion for Summary Disposition Re: Petition by Central Electric Power Cooperative, Inc.".
Wallace E. Brand, Esq.
Pearce & Brand 1000 Connecticut Avenue, N.W.
Suite 1200 Washington, D.C. 20036 C. Pinckney Roberts, Esq.
Dial, Jennings,.Windham, Thomas & Roberts P.O. Box 1792 Columbia, South Carolina 29202 Troy B. Conner, Jr., Esq.
Conner, Moore and Corber 1747 Pennsylvania Avenue, N.W.
Washington, D.C. 20006 o