ML19305A162
| ML19305A162 | |
| Person / Time | |
|---|---|
| Site: | 05000471 |
| Issue date: | 12/05/1978 |
| From: | Burt L MASSACHUSETTS, COMMONWEALTH OF |
| To: | Beverly Smith NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| References | |
| NUDOCS 7901040294 | |
| Download: ML19305A162 (23) | |
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$5 g ?1 9 THE COMONWEALTH OF MASSACHUSETTS Mm Puyu D cuRVrgnoo
,i. DEPARTMENT OF THE ATTORNEY GENERAL 1 i~
l JOHN W. Y'CORMACK STATE OFFICE BUILDING j, ONE ASHBURTON PLACE, BOSTON 02108 FRANCIS X. BELLOTTI . . . ,
CHARLES CORKIN II, CHIEF ATTORNEY GENERAL - ~ "
ENVIRONMENTAL PROTECTION WIED CCM~J - DIVISION Tel: (617) 727-2265 December 5, 1978 Barry H. Smith, Esq. 52 %
Office of the Oxecutive //
Legal Director ~
U.S. Nuclear Regulatory 8/ C Commission Washington, D.C. 20555 '
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In the Matter of:
A QhQ Y BOSTON EDISON COMPANY et al.
Pilgrim Nuclear Generating
' Q g h *a Station, Unit 2 Docket No. 50-471
Dear Mr. Smith:
Enclosed is a copy of the fin'al decision of the Massa-chusetts Energy Facilities Siting Council, dated October 24, 1978, which conditionally approved Boston Edison Company's annual supplement to its long-range forecast.
The Council's decision followed extensive joint hearings with the Massachusetts Department of Public Utilit!cs (DPU 19494) on the common issues raised by the Applicant's forecast supplement.
Phase II of the DPU investigation will focus on Boston Edison's construction program, including specifically the Pilgrim II nu-clear facility. The DPU has not yet issued a decision on Phase I of the hearings.
Of particular importance to these proceedings are the l conclusions reached by the Siting Council with respect to the l
methodology for the residential, commercial and industrial sectors.
In each instance, the Council found that the methodology employed was unreviewable, inappropriate, or based on incomplete data.
Specific conditions were imposed by the Council, dealing with the deficiencies and supporting assumptions of the forecast, which must 790104 04W
Barry H. Smith, Esq.
December 5, 1978 Page 2.
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, be addressed by Boston Edison in the next forecast supplement, due on April 1, 1979.
Very truly yours, c"~j> -
QuA<.6) y '4/.
LAURIE BURT I '
Assistant Attorney General Environmental Protection Division Public Protection Bureau One Ashburton Place, 19th Floor Boston, Massachusetts 02108 (617) 727-2265 LB:JK Enclosure cc. Pilgrim Service List j (with enclosure) .
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Energy Facilities Siting Council "5
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In the Matter of the Petition of )
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'"WL, Boston Edison Company for Approval )
of an Annual Supplement (1978-87) ) EFSC No. 78-12 to the Long-Range Folecast of )
Electric Power Needs and Require- )
j ments )
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NOTICE OF FINAL DECISION I
l Pursuant to EFSC Rule 16.5 a copy of the final de-cision in the above matter is attached. Parties and participants are directed to the provisions of Rules 16.6, 17.1, and 17.2 concerning petitions for rehearing and judicia' review. Any petition for rehearing must be filed with the hearings officer no later than 5 p.m.
on Wednesday, November 1, 1978. To file or not to file is entirely discretionary with each party.
The only change from the tentative decision is the addition of two paragraphs ac the ninth page in which the Council addresses the request of some intervenors for more specific findings as to the Company's method-ology.
/M* d ) t '1 Dennis J. LaCroix, Esq.
Hearings Officer i Dated at Boston this 24th day of October, 1978.
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TENTATIVE DECISION COMMONWEALTH OF MASSACHUSETTS Encrgy Facilities Siting Council ,
In the Matter of the Pe.tition of' ')
Boston Edison Compady'for Approval )
of an Annual Supplement (1978-87) to ) E.F.S.C. No. 78-12 the Long Range Forecast of Electric )
Power Needs and Requirements )
2 DOMSC (October 11, 1978) )
PARTIES and APPEANANCES*
Boston Edison Company: John J. D'esmond, III, Esq.
Assistant General Counsel and Ropes and Gray (by George Lewald,sEsq. and Roscoe Trimmier,'Jr., Esq.)
Attorney General _'_s Of fice: Michael B. Meyer, Esq.
Assistant Attorney General Utilities Division Boston Clamshell: Harvey Salgo, Esq.
Mass. Public Interest Research Group: Charles Harak, Esq.
DPU Staff: John L. Talvacchia, Esq.
Mass. Energy Office:. Alan Johnson, Esq. ,
- This list names only those parties who actively par-ticipated in,this case. Others named in the service list who were either intervenors or interested persons pursuant to EFSC Rules 15.2 ,and,15.3'and who are not listed above took no part in this case by either presentation of witnes-1 .
' ses or written argunen'E.
4 The Massachusetts Energy Facilities Siting Council conditionally approves the second Annual Supplement (1978-
- 87) to the Boston Edison Company's long-range forecast pursuant to G.L. c. 164, ss69J and as further descqibed in this opinion.
- HISTORY OF THIS PROCEEDING On December 30, 1977 as required by G.L. c. 164, ss69I, Boston Edison Company'("BECo" or " Company") filed an annual supplement to its long range forecast of electric power needs and requirements with the Energy Facilities Siting Council ("EFSC" or " Council"). This second supplement covered the years 1978-87 and was sub-ject to Council review under G.L. c. 164, ss69J.
The adjudicatory proceeding herein, as a vehicle for Council review, was announced in a notice published by the Company according to the hearings officer's in-structions. At the March 30, 1978 prehearing conference in this. case, the only party who sought to intervene was the Attorney General. That intervention was allowed and l
in an order' dated March 30, 1978, the Council established a reciprocal discovery cchedule and set a hearing date of May 8, 1978.
However, this schedule was suspended two weeks later
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so that this proceeding, E'SC F No. 78-12, could be coordin-S 9
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ated with a proceeding, DPU 19494, being initiated by the Department of Public Utilities (" Department" or "DPU").* This coordination was done to avoid duplica- ,
tion of testimonial and evidentiary matters on issues common in both proceedings.** Consequently, by an order dated April 14, 1978, the Council joined its review of the Company's forecast supplement with the Department proceedings in DPU 19494; the DFU Commissioners issued a similar pronouncement on April 18, 1978.. (Tr. II:
209-211).
The scope of joint hearings was defined on April 24, 1978 by the Council and the Department. DPU 19494 was divided into two separate phases. Phase I would focus on the BECo supplement only and would be jointly conducted by~the two agencies. Phase II would continue the Department's investigation of the BECo capacity ,
needs and construction program and would not involve the Council. (Tr. III; 330-331).
- DPU 19494 is an investigation by the DPU in BECo's capacity needs and the construction program required to meet such needs. This lnvestigation came about as a result of the most recent BECo rate case, DPU 19300, and the orders therein.
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- The first phase of the investigation in DPU 19494 l was.a review of the Company's projections of need for electric power as found in the supplement under review by the Council.
As a result of the change in the proceedings, the Council heard additional motions to intervene in this matter. (Tr. III; 338 _et_ sec.).
In a decision dated April 26, 1978, the Council granted the petitions to intervene of the, Boston Clamshell Alliance, the Attorney General, the Department of Public Utilities Staff, the
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Massachusetts Energy' Office, the Town of Dover, Massa-chu etts Fair Share, Massachusetts Public Interest Re'-
search Group, and the Plymouth County Nuclear Information Committee.* Petitions to intervene from the following individuals were denied, but they were permitted to par-ticipate as interested persons pursuant to EFSC Rule 15.3 (4) : Stanley U. Robinson, III, Charles Norman, Alleen Wenckus and Torgeir Kvale.**
After several prehearing conferences and extensive reciprocal discovery, the joint hearings began on July .
17, 1978 and concluded on August 30, 1978.*** The
- Clamshell, PIRG and PCNIC were required to be repre-sented by a lead counsel during the hearings as a condition to their intervention. Cf. EFSC Rule 15. 2 (5) . Of those granted intervention, PC5IC and the Town of Dover did not so participate, nor did Mass. Fair Share (due to personnel l
difficulties) after its brief involvement in discovery.
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- The Council has not received any input from.these parties.
- Sessions were held three days a week for that seven week period, with a total of twenty days of joint hearings.
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l Company presented six witnesses and the intervenors, fourteen; all were cross-examined. The parties intro-duced numerous exhibits.
The record in this case was closed on September 8, 1978.
on September 27, Initial briefs were filed 1978 and reply briefs on October 4.
CONDITIONAL APPROVAL E
Last year, in its rev-iew of the BECo long-range forecast and first annual supplement thereto the ,
Council reangni zed the difficulties faced by the Company's forecasting personnel in makin g public the product of their work pursuant regulations. to EFSC statues and See 2 DOMSC 43, 53 (December 13, 19771 In that decision, the Council put the Company on notice that a forecast which may have beenepted acc without question for many years for in-house use would not necessarily be one acceptable forpublic and Council review. Id. at 53.
Yet the Council acknowledged the good faith effort of the C ompany under the circumstances and approved the for ecast and its first supplement subject to cert i Id. at 54, 56-57 a n conditions.
The Council today recognizes tha't las t' year's BECo decision required.the Company t
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a process of revision that would certainlynot be I
s completed in one year.* The Council sees this process as an on-going one which will necessitate the continuing cooperative efforts of the Council, the Company and the pub 1'ic.** Of'thesesefforts, it.must be said that those of the Company are most important if progress is to con-tinue apace. Today the Council finds that the Company's efforts in its most recent supplement (EX. BE-1, BE-2) exhibit a decided improvement over the filings reviewed last year. Looking at the forecasting effort as a whole, the Council acknowledges that this year's supple-ment is not an unreasonable first attempt in a very
- Indeed, in fairness to the Company, the timing of last year's decision, its receipt by the Company and the date of filing of the supplement now under review must be considered. (cf. EX. BE-100 pp. 8-9). It can hardly be said that the Company had much time to consider the conditions imposed and specifically address them in this supplement; no intervenor challenged this point. That changes in methodology are evident in this supplement reflects the Company's continuing good faith efforts to improve its forecasting techniques.
- To some extent it is a hindfance to these coopera-tive efforts that the public review of the supplement is done within the context of adversarial adjudicatory pro-ceedings. The crux of the review, especially in BErs case, is an evaluation of forecasting technique. This
- calls for an exchange of ideas on econcmic and statistic-l al theory and an exploration of the relative strengths and weaknesses of such sophisticated concepts as comprise
! - forecasting's state of the art, particularized by applica-tion to a company's service area. Too often, the adjudi- -
l catory proceeding becomes a centest where " winning" rather than review becomes the goal. See Haskell P. Wald,
! " Reflections on Administrative Hearings," Public Utilities Fortnichtiv (June 8, 1978).
y, difficult area. This year's supplement was accurately categorized by the company in its brief (at p. 5) as "a transitional forecast in the sense that it is a sub-stantial departure fr,om the forecasting procedures .
utilized by the Company in the past."
However, problems remain with. specific aspects of BECo's forecasting methodology despite the overall im-provement noted, and thus the Council must again give only a conditional approval to this year's supplement.
The inadequacies in the BECo methodology and the condi-tions imposed thereon are detailed below. Generally spcaking, a review of the wealth of material presented by t'ce parties in this proceeding gives the distinct impression that the BECo approach and present state of development of its methodology suffers'from ambiguities, imprecision, and a nonrigorous application of analytical tools. This impeded the reviewability of the supplement
' and is a definite concern for the Council; note that re-viewability was the thrust of last year's critique of the judgmentally modified trend lin'e analysis approach then used by the Company. 2 DOMSC 43, 55 et seg. While l the Company has taken steps toward improving its method- l ology by no longer relying solely on its past approach, one lesson to be learned from the extensive and intensive l
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review of this BECo supplement as evidenced by the hundreds of pages of pleadings, briefs and the like in this docket, is that the company should be more rigorous in the defi,nitions,used in explicating its methodology.
Again, this is not to say that the Company has not improved on the forecast reviewed last year.: it has. The improvement is noticeable and considerable; conceptually, the Company is definitel; moving in the right direction. Nonetheless, the Council is mindful that this year's supplement is transitional and as such still contains flaws of some magnitude. Conse-quently, the Council must maintain its position of last year and does not accept the forecasted electrical consumption or demand growth rates of this year's sup-plement for purposes of justifying generating capacity expansion or proposed transmission facilities. See 2 DOMSC 43, 57-58. The Council's reluctance to accept the results of the forecast for this purpose stems from i
the record in this case which shows that even with im-l
- provements to date, the accuracy of the projections is i
j still suspect due to basic problems with the mechanics of.the methodology and the supporting assumptions. -
This is described in more detail in the' conditions i stated below. However, the Council is ready to reconsider
this reluctance upon the filing of the next Beco supple-ment to be'due on April 1, 1979. It is hoped that the next five months will enable the Company to address the
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Council's concerns in that supplement given the extended 4
filing date. The Council staff will be instructed to schedule proceedings on the next filing as soon as it is received from.the Company. . .
In this decision, the Council is not attempting to choose a methodology for the Company. It seems, how-ever, that some of the intervenor's would have the Council do this, given the thrust of their comments on the tenta-tive decision asking for more " specific" findings. They assume, of course, that one methodology can be said to be proper and that the record herein clearly shows what that methodology is. The Council does not feel that either assumption should be made in this matter; the Council's decision assessed the Company's forecast based on an evalu-ation of the evidence presented and the state of the art of forecasting.
j As has been pointed out, the review of this year's I
.BECo. Supplement continues the learning process begun with last year's review of and decisions on the first BECo.
. filings with the Council. 2 DOMSC.4 3 (December 13, 1977)..
,In both. cases, the Council, with intervenor-inpute examined
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l the Company's forecasting efforts. Methodological short-comings were pointed out and discussed in both decisions l
as were the inadequate substantiation of assumptions used l
l by the Company. Specific conditions were then and are now imposed which addressed these shortcomings and the lack of substantiation providing the Company with some direction from the Council's review. process. To go further would be'to do the forecasting for the Company, a step and posi-tion which the Council finds inappropriate to take at this
! stage of the learning process.
- Before turning to the conditions of approval, the Council must address a potential source of confusion with its decision not to accept BECo's forecasted growth rates as a basis for justifying proposed facilities.
It must be clear from the outset that this can have no effect on the Company's proposal to build the nuclear power plant known as Pilgrim II. Any Council action on this facility is precluded by an earlier Council decision which exempted or " grandfathered" that facility from Council review. 1 DOMSC 134 (March 10, 1977). This l
decision was upheld by the Supreme Judicial Court in Plymouth County Nuclear Information Committee, Inc. V.
I Energy Facilities Siting Council, 1978 Mass. Adv. Sh.
1 l 139. The Council, by its ruling today, canrot and.is not prohibiting construction of Pilgrim II.
However, it is to be noted that the DPU sat jointly with the Co.uncil in this BECo supplement review as Phase I of its investigation into the BECo capacity needs and construction program. As stated earlier, this joint hearing was convened to avoid repetition of testimony and evidence on issues common to the Council's review and the Department's investigation. Phase II of the DPU investigation will more specifically focus on the details of the BECo construction program which obviously includes Pilgrim II. The Council offers the Department today's BECo forecast supplement decision as its assessment of the Company's methodological mechanics for use in its continuing deliberations.
RESIDENTIAL FORECAST The principle methodological problems in the resi-dential forecast are: 1) the average of Case I and Case II; 2) the use of a short-run own-price elasticity factor in an end-use model, 3) the population /househo.ld projections, and 4) the projections of appliance use efficiency, penetration, and saturations.
The averaging of two cases, each of which the Company apparently believes to be unrealistic, is an unreasonable methodology. The Council cannot be' expected to do the evaluative work necessary to determine the appropriate t
assumptions which is the Company's responsibility. The present " Cases" illustrate the inappropriateness of this averaging method. The Council has been asked to accept as part of this average the assumption of no appliance efficiency gains by 1987. This assumption has already been surpassed. On the other hand, the assumption of increasing appliance efficiency in Case II which the Company believes to be too optimistic and others believe to be too pessimistic, was applied in a nonrigorous manner. In fact, if the Company had followed its own description of the computer program, " USAGE" (P. II 65, Supplement I-B) then its stated justification for averaging-- "... to account for the expected total of various appliances since all of the existing stock will not be replaced during the forecast pericd..." (BECo Brief p. 24) -- should have been accomodated. Asking the Council to accept an average of Cases is a relega-tion of the responsibility to analyze developing trands and to compute a best estimate of these factors as part of the Company's forecast.
The Company's explicit recognition of a. price effect is a big step forward from previous forecasts. However, the Council must assure that this development proceeds on a sound methodological basis.
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-The Company's use of a short-run, own-price elasti-i city and improved appliance efficiency.for short-run and long-run adjustments respectively of forecasted residen-tial electrical cons,pmption to forecasted higher prices suffers from both nonrigorous definitions and inconsis-tency of application. While the company's efforts are a good first attempt, the record indicates that price elasticity effects are significantly more complex than the Company's current representatica. The problems with the Company's application include; 1) the change in appliance efficiency does not adequately capture all the long-run price elasticity effects such as impacts on j appliance use, penetration, retrofitting and replacement rates. 2) The' forecast of price increases is . tot based on a reviewable methodology. 3) The short-run price elasticity estimate, while defensible, was inadequately estimated for the service area. 4) It is preferable in an end-use model to explicitly reflect price or other l
effects such as income elasticity, cross price elastici- l i ties, changes in life styles, in the parameters of the variables which are effected, be it average use, penetra- ;
tion / saturation, appliance life, or new appliance effi- l ciency.
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The Council takes notice of the Company's increased attention to the demographic portion of the forecast.
The importance of this portion was demonstrated by the sensitivity of the forecast to key demographic assump-tions. Because of the wide disagreement shown in the record and the uncertainty in this area, the Council finds that additional work is necessary before the popu-ulation/ household projections can be accepted, overall, the Council finds great value in the end use modelling approach for the residential sector. The Company has initiated a great deal of data collection and analysis. However, in addition to the inadequacies noted above, the record indicates that reevaluation of the new appliance efficiencies is in order. As noted above, the Company should be providing its best estimates of new appliance efficiencies, specifically, the average consumption of each new appliance by type and year as Federal appliance efficiency standards are implemented by appliance manufacturers. Related variables such as present average use (consumption per appliance) , average appliance life, and penetration rate including inter-l appliance substitution, should be reviewed by the Cdmpany.
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CONDITIONS ON RESIDENTIAL FORECAST
- 1. Th'e Company shall develop its best estimate for the assumptions regarding new appliance efficien-cies.
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- 2. The Company shall review the estimates of annual kilowatthour consumption per appliance both currently and with its best estimates for new appliance efficiencies including projections of average appliance life, penetration rate, inter-appliance substitution, DOE new appliance efficiency stan'dards, and conservation programs and policies of the Commonwealth.
- 3. The Company shall reevaluate and restate the demographic portion of the forecast, in particular:
- 1) fertility rates,
- 2) net migration projections,
- 3) headship rate projections, and
- 4) customer / household counts.
- 4. In end use models, price elasticity effects.are more appropriately estimated for their impacts on average use, penetration / saturation rates, appliance life, and new appliance efficiencies. In models which include ex-plicit elasticity parameters, such parameters should pre-ferably.be estimated for the specific service area and from a model which permits consistant application in the L
k forecasting model. When explicit price elasticities are used, the forecast of future prices becomes important enough for the Council to require *that such forecasts be based on a reviewable methodology.
COMMERCIAL All parties recognize the " transitional" nature of the Company's first attempt at an econcmetric modeling of its commercial sector. While the Council need not require a perfectly specified model with excellent sta-tistical qualities, it must require that some faith can be placed in the predictive power of a model. The record indicates that the methodol'agical approach to estimating the Commercial model is not sufficiently sound to justify faith in its predictions. Even the Company (though per-haps not for the appropriate reasons) believed there was a need to mix the results of the econometric model with a trendline analysis. Tbc averaging of two methods to produce a forecast is inappropriate here because implicit l in averaging two forecasts is the assumption that each i
forecast is equally probable. The methodological confu-l l sion with the econometric model is evident in the choice j
l of rate of change variables for GNP and price while the fo'recasted values for these variables are average values, l held constant throughout the forecast period.
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CONDITION ON THE COMMERCIAL FORECAST
- 1. The Company shall review the approach taken to modelling the Commercial sector. If additional econo-metric modelling is timilarily deemed unproductive, the Company should pursue alternative approaches.
INDUSTRIAL FORECAST The Council recognizes the-Company's efforts to dis-aggregate ire Tndustrial forecast by two-digit SIC code as required by law. This represents the Company's first attempt and the Company did not have sufficient time to incorporate the conditions of last year's decision in this forecast. The Council finds that the Company's justifica-tion of the various trending techniques was impossible to review. Clearly, the conditions in' last year's decision provide a basis for the Company's revision of the indus-trial forecast. Forecasts of economic activity for each SIC group should be as service area specific as possible as well as reviewable for consistency with state and national economic and demographic projections. Whatever method is chosen in the future, conservation must be addressed in greater detail than is implicit in selected historic data points.
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CONDITION ON THE INDUSTRIAL FORECAST l
- 1. All the conditions contained in last year's decision are found to be appropriate and are imposed again. See 2 DOMSC,43, 56-57.
PEAK FORECAST The peak forecast is dependent upon the energy forecast, the contention that demand at peak is totally unresponsive to higher prices, and estimates of historic class peak factors. The Council notes the Company's initial analysis of the relationship between peaks and temperatures and urges continuation and refinement of this analysis. The Council recognizes the difficulties involved in estimating the impacts from relatively new phenomena such as higher prices and from anticipated changes such as peak load pricing and load management.
However, the Council has greater difficulty in accepting the Company's argument that it did and must defer judge-ment in these areas until more experience is gained to permit some quantification of their effects. In fact, l
the company presumes that peak load pricing will have no effect on peak demand. The Company has not done sufficient analysis to justify this judgement. Indeed,
( the intervenors introduced evidence which indicated a
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potential reduction in peak loads from peak load pricing.
The Council recognizes that the inclusion of effects of peak load pricing and load management would be appropriate to the level of analysis which is permitted by existing data. It is incumbent on the Company to seek out data, pursue various avenues of analysis as objectively as possible, and develop appropriate methodologies which can begin to reflect peak- load pricing and load management as well as changing load patterns in the peak load fore-cast.
CONDITIONS ON THE PEAK LOAD FORECAST
- 1. The Company shall collect and analyze data re-lating to peak load pricing and load management.
. 2. The Company shall develop methodologies appro-priate to reflect potential impacts from peak load pricing and load management.
CONDITION ON ALL SECTORS
- 1. Conservation, including the conservation pro-I grams and policies of the Commonwealth, shall be ex-plicitly considered in any methodology.
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Dennis J.yLaCroix, Esq.
Hearings Officer Approved unanimously by Cooncil members present and voting at EFSC meeting on October 18, 1978.
Christine B. Sullivan EFSC Chairman l
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