ML19305E351

Comments on Antitrust Review Re Cajun Electric Power Cooperative,Inc Ownership Interest in Facility,On Behalf of La Consumer League,Inc.Commission Should Request Addl Info & Hold Hearings to Determine If Antitrust Implications Exist

ML19305E351
Person / Time
Site:	River Bend
Issue date:	04/18/1980
From:	Irving S PUBLIC LAW UTILITIES GROUP
To:	Rubenstein L Office of Nuclear Reactor Regulation
References
NUDOCS 8004230466
Download: ML19305E351 (13)

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Public Law Utilities Group -

One American Place, Suite 1601 Baton Rouge, Louisiana 70825 (504)383-9970 Stephen M. Irving, Director April 18, 1980 l

Mr. L.S. Rubenstein, Acting Chief Light Water Reactor Branch No. 4 '

Division of Project Management U.S. Nuclear Regulatory Commission Washington, D.C. 20555 RE: Comments on Antitrust Review -

Riverbend Station No. 1, Docket l No. 50-458 - Proposed Purchase by 1 Cajun Electric Power Cooperative,Inc.

Dear Mr. Rubenstein:

This letter is being submitted as a comment on behalf of the Louisiana Consumer's League,Inc. relative to the above matter. Before proceeding with our comments I wish to point out to the Commission that the pub-lished notices of this action were inadequate in that all of those published locally ommitted the statement as to the date by which com- j ments were due. I have attached copies of the advertisements in which you will note that the last paragraph of the official notice was ommitted.

This has caused a delay in the transmittal of our comments.

Our organization has met with representatives of Cajun Electric Power l Cooperative, Inc. and the cooperatives which own and participate in Cajun. All indications to us have been t at Cajun is not becomming involved in the River Bend plant because it needs or even wants the project. The interest of Cajun is in concessions from Gulf States Utilities relative to transmission lines which the cooperatives feel are vital to their continued existence. It appears to us, based on statements by cooperative representatives that GSU may have used its I l

control of transmission facilities necessary for Cajun to deliver power to its members to coerce the cooperative into buying a portion of the River Bend facility.

l In addition to the statements made by cooperative representatives we offer as additional evidence in support of our position the fact that Cajun's reserves will be quite adequate without the River Send purchase and an associated agreement in which GSU agrees to purchase a portion of Cajun's 1933 coal unit. When all of these agreements are considered Cajun's reserves will fall to only 7% in 1996 - dangerously low. This information is taken from data filed with the REA which has not been filed with the NRC (copy attached). f,i

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An agency of the Louisiana Consumers' league,Inc., funded by the Community ,

Services Admuustration l

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Public Law Utilities Group l One American Place, Suite 1601 Baton Rouge, Louisiana 70825 (504)383-9970 Stephen M. Irving, Director PAGE TWO MR. L.S. RUBENSTEIN APRIL 19, 1980 Finally, providedwe thenote NRC that GSU with hasnotice either not formally of and /o(or perhaps r the detailseven of informally) its agree-ments with Cajun to buy an interest in Cajun's 1993 coal fired unit and the transmission line agreement (see discussion in attached pros-pectus). Since these agreements were all part of the River Bend package they should be considered in the antitrust review process.

Based upon the above comments, we ask that the Commission request the additional information and hold the necessary hearings to fully in-vestigate the above matters to determine if there are antitrust implica-tions in the method used to obtain the agreement of Cajun to purchase an interest in River Bend.

Sincer 'f , -

Ep.phdiTIr' ng Director SMI/ro /

Enclosures:

Multiple CC: Darl Hood, Div. of Project Management, NRC Lisa Singer, Esq., NRC A. Toalston, NRC Docketing and Service Section, NRC Attorney General - U.S. Dept. of Justice - Antitrust Division An agency of the Louisiana Consumers' leagte,Inc., funded by the Community Services Administration l

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MORNING ADVOCATE. Bates Roese, La. Tees., Jan. 8,1986 ,

f a 1 U11111D STAfts NUCLEAR - l REGULAT3RY C0eINS880ll ' I GULF ST&TESImLmES COIIPAllY . l RIVER DEND STAfl05,UINT 1

• • • • • ' N* r Y ,

mmc wRica,Tw Ao0m0mi, i AllTmlUSTIMPORMATl00k e Tula POR SUSWSSION OF VEWS QN .

AlmTRUST MATTERS )

Oum sense Uumes Cem se i 103 el me meansActtaerv, emy, w tesa, es ameaeed, emment to ec an l med en Ostener 3s, iets,warmeem row....d av f me aseene, cameres ser marust e ies ei rowed  ;

6,io Con Peri es, aseenesi.,Tus wermanen adde i Celes fleetne Power sensereses,las, and Sem ney=

twe Gef, ins. es erosasse of me alvor stenen, uma i.  ;

fte Intesneten ses med by tidt 91stes UeBees '

Comossy mi essasseen esa per aposseems for

- esensumase earnes and meerenne kenese ser me meer Send Stenen. Uses 1 and 3. fine ses for tes plentit lesatod in West Fatstone Pesten, Leicasene.

The artelasi emetest pereen of me eseessmen was esenated en seeeeeeer 34, 1973, and lesses of

• • - Itsenet et desessmen ter Cemeerusten earnes and

• Cearege useness and Avesseeny of Aegesenra idetsunamiel Roset flee ser Subadseenef wees en Anstrust im ses puttuned in me PEDERAL IIEGISTER en Ostseer ta, itf 3138 FA 30tedL The I

Neese of lesenne ses piesames in me Fy Rt018tta en Ostseer 23, isT3 (38 F A 39844 {

Cestsoof me seese stated desuments ero seehable l ser sunne inmecem Des enneen,irir e e.i,=. a.me

,, e mco.mme.ss >e. mess P sY e. mau .d a mea.d. unser,wonres .e Greach PerGmend M 94. FrentIIeGe, Leidulums s0 l

,l NnL Intermesen in eennessen meh me esebest egates et une emessenen een to estamed n, mesme suna U.8, Musiner messessary Censmeston, Wesenstest 0, C.20644, Atenesar amatust and hemmaWy Gress.

• 014ee of Igualmer Reester fleemiseen,  ;.

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. 'A, qt 1

.+.m,.. .a ~ ~

y acun w to do uMe a .

refund upon return ef the docu-inna; each in an amount equal .

e,ose.se to lot.at of the esatract assount. monts withir; tea (10) daya aAer '

No bid may be withdrawn, for a bid date.

period of Thirty (30) days ane Contractors, material suppliers.

+

receipt of bids- sub-contractors, etc., understand i that the above mentioned amounts, i 9,739.22 The Owner reserves the right to which aru to be rotamed, cover the  :

reject any and all bida and to waive e d me m M m M h docu.

88y Inform 815%I68 I8CidM%8IIh8'80 * ,

s 26*461*o6 ments and this cost exists whether - I STATE OF LOUISIANA  ;

se *bliI'"ed MISION OF ANMEAN or not a contract is lot. The retainage '

Charles E. Roemer, II, Pa==ia- is not conditional upa award of the .

sioner contract aner receipt of bids.  :

822s,622.co No bid may be withdrawn after i FACILITY PLANNING AND the scheduled or extended closing t CONTROL DEPARTMENT time for receipt of bids for at least  ;

J. Ben Meyer, Jr., Director thirt'y (30) days. t No. 6007: 1-10: See arsu pot.rce Juay . Each proposal must be accom- i senter #13 or asse rsr.zerana panssu *

.E7 UNITEU MTATEN NUCI. EAR "f;

g, [(6 percent'of the bass bu, made pay-ecsmas7 31, isso g7 f UTILITIES COMPANY able, without enadition, to the -

RIVER REND MTATION. UNITI .Ownere as a guarantee that Go  :

. DOCKETNO.sMia 'idder, if awarded the Contract  :

• 'hin thirty (30) days aner receipt i NOTICE 0F RECEIPTOF . ids, will promptly esecute said -

• s140,000.00 ADDIT 10NALANTITIRURT contract. The bid security of the -

s, coo.00 INFoltMATION: TIME FOR

• 5,000.00- three (3) lowest bidders will be 500 00 MUnMisAION OF VIEWH ON retained until the Contract is  !

ANTITHUST MATTFHM awarded or other disposition is 158'5 " " Gulf State Utilities Company. made thereof.The bid security of all pursuant to Section 103 of the Atomic other bidders will be returned ,

Energy Act of 1964, as amended, filed . shortly sner the receipt of bids. '

on October 26, 1779 Information The Owners reserve the right to 5* requested by the Attorney General for i 3,*g Q o , j-

,, . antitrust review as required by 10 reject any or 211 bida and to waive . .

CFR Part 50. Appendix L. This in' informalities.

11'400.00 THE WEST FELICIANA I

4,500.0o formation adds Cejun Electric Poww es, coo.co Cooperative,Inc.and Sem RayburnG PARISH POLICE JURY i 4,500.00 & T. Inc. as coowners of the Rive CLARENCE E. BUSH, *

. 2,000.00 Bend Station, Unit t. President 14,600.00 No. 6004: 1 10: Stc The information was filed by Gulf ,

,'Q*] Ates Utilities Ccm. pany in 3,,,,, nection with their application' gen.for M TOBIDDERS #

truct ta s Suled ti"I publicly read bids will be o ned u d i

'h *' N ficenses ,m yy on by the rchasing j Units 1 and 2.Thealte for tids t iq. , Sectim d the Divisma d Adrnints-179,o17.co located in West' Feliciana . tration. Garden Level West, One ,-

Louisiana . American Place. Baton Rouge, Lou. .

(2e,517. col The original antitrust portion of the islana, P.O. Box 44096, at 10 A.M. .

application was docketed on Sep. for the following:  ;

tember 24, IFts, and Notice of Raeoipt A. Plumbing Equip., Jan.14 j 25,000.00 of Application for Construction C-Dry Cleaning Fluid, Jan.14  ;

sted $3 bond (22,000.001 Permits and Operating Licenses and

- C-Orvus Hytemp Granules, Jan.

Availability of Applicant's En- 14 >

. v' onmental Report Time for Sub- .

C-Poly *I=ehanatami,la.t'yclomide, ,

mission of Views on Antitrust Mat- Ian. 14

• ters. was published in the FEDERAL J. Packing House Prdts., Jan.16  :

112* REGISTER on October 23.1973 C8 J. Poultry &. Eggs. Jan.15

, F.R. 29245). The Nouce of Henrir.g srae tea was published in the FEDERAL J4eafo&d. Jan.16 i -

(91,250 ool L-Hardware, Jan.17 22,210.oo " C 3' ' ..'

L Variable Speed Pulley, Jan.17 ' ,~

(50,121. u) Copies of the above stated documenis are available for public s Bid Forms, Information ,

inspection at Ihe Commission's Public and Sp=*i dans may be obtained  ;-

Document Room.1717 H Street. N.W., from the Purchamng Sectim listed j tsu tos.tCE JUaf Washington, D.C. 20065, and at the rance oli or must ras.ze =--' paarsa Audubon ubrary. West FeHelana above. No bids will be received aAer b h W k ar W W . W j

"'" " . Branch, Ferdinand Street. St. right is reserved to refect any and al! 4

spesa 31.198e Franclaville. Louisiana 7UF75. bids and to waive any informalities.  :

Informalinn in connection with the , CHARLES E. ROEMEk, II i antitrust review u( this application Commissioner of Administration

. can be obtained by writing to the U.S.

Nuclear Hegulatory Commission, PAUL A. HAYES, JR. j3 Peojoeted Cash Flew Washington D.C. 2n655. Attention:

Assistant to the Commissioner j HUGH M. CARLETON, t

, , , , , Antitrust and innlemnity Group. C.P.P.O., C.P.M.

Offlee ut Nuclear Heactor  !

adooted audeet State Dirsetor of Purchasing 1 itettulation No. 6006: 1 10; lac

• y f:(h" ST. FRANCISVILLE DEMOCRAT, JANUARY 10, 1980 3 9

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INDUSTRIAL @R@G(r%3SS ,

Gas Turbine Power achieved without a carbon burn-up cell, according to curtiss-Wright. UNITED STATE 8 NUCLEAR Generation with Fluidized Performance showed low sulfur REGULATORY COMMISSION Bed Coal Combustion dioxide (0.3 pounds per million Btu with a 95 per cent removal rate at a GULF STATES UTILITIES COE The Curtiss Wright Corporation i of 1.5) and low PANY has reported that it has ac- calcium suyur rat,o nitropn oxide (0.2 pounds per, mil- RIVER BENO STATION, UNIT 1 complished a key technical first in lion Btu) emission to the environ-

- the use of coal for electric power.

mm- em S on 8M DoCMT N0 388 488 One-thousand hours of electrical .

lower than the present in%8 tenm new generation have been achieved with source performance standards NOTICE oF RECdiPT OF power supplied by a gas turbir.:' AcomonAL ANTITRUST (NSPS) for bituminous coal issued ImpoRMATioni Tina roR .

engine fired by direct coal combus- by the U. S. Environmental Protec-susmission or views on 1 tion in a pressurized fluidized bed ANTtTausT MATTans Agency. The NSPS for sulfur (PFB). This aehievement 'Y".de dioxi is 1.2 pounds maximum per Gue sumo usitws Company. pursuant e demonstrated that coal can be million. Btu with a 90 per cent bur &d efDciently and economically. Seceon 103 of the Atomic Energy Act at

• in an environmentally acceptagle nitrogen . 'gmoval

- ,rate and 0.6 potmds 1954, as emeded, med on Oceur 2s.

oxide per million Btu. 1979,informenon requested by the Anomey manner

, The U. S. Department of Energy ,;, , c y,'d a te t a RP 50 Th is a sponsor of the program at which was brought on line two years adde Cajun Ekctric. Power Cooperseve. me.

Curtiss Wri 5ht, which is developing and sem Reybum G&T, inc. as co+ snare ago.The Guidized bed combustor, of of the River send Station, unit 1.

a combined cycle power plant one megawatt thermal ootput,incor. The informenon was med by oust stesse whereby the usual oil or natural gas- UWmes Company in connecean weet their porates full scale commercial plant appuceson for coneuenon permes and fired combustor of a utility gas tur-bme is replaced by a pressurized internal heat exchan5er tubes opere#ng ncenso for ttw River Bond Ste-characteristic of Curtiss Wright's tion, urvis 1 and 2. The one for this pleit is fluidized bed in which crushed high locawd in West Felicione Parteh, Lculatene.

sulfur coal is burned in a mixture of air-coolpd.Guidized bed w.ept. In this arrangement, only bne imrd of The originsi entitruet pornon of vie ap-dolomite or limestone. Combustion turbine engine compressor flow is pnesson wee docued on September 24 temperature is maintained at 1,650 1973. and Nonce of Receipt et Appasson degrees Fahrenheit where a high med, gor coal combustion and the for Cewuene Pm ed Opereeng rsctivity between the sulfur and nmainder8 is heate4n an m bed yeensee end .m of Appucent's En-tube heat exchanger which takes full vironmente Report Time for sutmoston of dolomite or limestone results in advantage of the characteristically viewe on Anstrust Meners. wee punashes in calcium sulfate formation rather high heartransfrr Provided by the the FEDERAL REGISTER on Octocer 23.

1973 (36 F.R. 29246). The Nepos of Heming than sulfur dioxide. Unlike the wet turbulent movement of bed granules. wee putHiehod in the FEDERAL REol8TER

, sludge formed by Due gas sulfur The one third now which has been on Octo0er 23.1973 (36 F.R. 29243).

dibuide scrubbers, the waste used for combustmn is cleaned by a coowe of the ecove stated documene are material from the cuid bed is in a series of hot gas cleaning stages and eveaso6e for outpic ineoecnon et the com-dry, granular, easyao-bandle form. then combined with the cleaned flow miselon's PutHic Document Room 1717 H The low combustion temperature Street. N. W., Washington. D. C. 20566, and fr m the heat exchanger. The total et ine Audubon Library. West FeNolone also leads to very low formation of now then passes through the Branch, Ferdinand Stroost, St. Francievels, oxides of nitrogen (NOx ). Louisiana 70775.

engine s turbine stator and rotor The test plant has demonstrated system. The dilution effect on com. mfon soon m conneeson wahrw enseust the erncient and clean combustion of .rev,ew of tms appnceaan con to ociemed Dy bustion gas particulates of the clean wnting to t's U. S. Nucieer Regulatory Com- "O several types of bituminous coal hav- air from the m. bed heat exchanger is mission. washington, D. C. 20555', Anonnon:

ing sulfur contents greater than 3 per a key difference between Curtiss- Anttrust and indemruty Group, Office at E f,

Nucieer Reactor Regu!stlon.

Wright's air-cooled bed and the fic e cy o o er 99 per ent wa's r

', steam cooled beds being considered 7 by others. Turbine inlet particulate Over 2,500 hours0.00579 days <br />0.139 hours <br />8.267196e-4 weeks <br />1.9025e-4 months <br /> of coal-fired SENIOR RATg grain loadings were controlled to low operation have been accumulated ENQiNEER levels during the test, with resulting the test plant to date. Initially, work g Empending Rete Dept. is looidng hor* es , negligible effect on the stator and was focused on bed and heat ex- t pertenced Gas or Electnc Pete Engineers or rotor. It is important to note that the changer operating parameters and j Accountants to prepare rete increase so-rotor blading, rather than the stator, hot gas clean up development, oncetens. Degree pius 3 10 yre. esperience. is the critical engine component. due which was followed by turbine to the., centrifugal force field. The engine durability testing. Sup-up r e AA E OE. se e2 resume to: everity of the 1,000-hour test plement,mg the test plant results are operating eviditions was magnified a variety of other tests of in-bed by the use of a small turbine with a tubes and tube materials. Aggregate Personn D o. n rgy Grp.

testing time exceeded 10,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br />.

P.O. Son 3724 rotational speed effect significantly San Frenctoco. CA 941t9 + higher than will be the case in larger, The next phase of this onSoing enmmercial scale machines. DOE development program is to I PUBLIC UTILITIES FORTNIGHTLY--JANUARY 17, 1900 64 . g Y h g hg {b { d}

e RECEIVED 404R 311980 aY aue 4

USDA-REA-EIS(ADM) 80-4-D Rural Electrification Administration (REA) financ'ing of an undivided ownership interest of River Bend Nuclear Power Station Unit 1, near St. Francisville Louisiana, for:

Cajun Electric Power Cooperative, Inc.

Sam Rayburn G&T, Inc.

Draft Supplemental Environmental Impact Statement River Bend Nuclear Power Station Unit 1 Joseph S. Zoller Assistant Administrator-Electric US'DA-REA ',,

Washington,lD. C. 20250 Tel : 202 447-6.237 The Draft Supplem ntal Envirob~ mental TM. pact Statement (DSEIS) has been prepared by the REA to examine alternatives to participation in the project and examine environmental impacts associated with REA's proposed financing assistance. "**

Comments required by: gay 121980

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CAJUN ELECTRIC POWER COOPERATIVE. INC. 1 WITHOUT PARTICIPATION IN RIVER BEND NUCLEAR UNIT NO.1

("No Action" Alternative) i l

CEPCO Purchased l Load Ca pacity Net Generation Total Surplus System l Year (MW) (MW) Responsibility Additions Capacity (1) Capacity (2) Reserve  ;

. 1983 1k3O 145 (9) 1493' 540 (3) 1830 337 39.4 1984 1560 100 (10) -1 687' ' 1830 143 24.5 i 1985 1701 65 (11) 1891 275 (4) 2105 214 27.6 1986 1856 115 (12) 2019 275 (5) 2380 3 61 .

34.4 1987 2025 115 2214 2350(6) 136 21 .7

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1988 2209 115 2425 540(7) 2890 465 36.0 l l 1989 2410 105 2657 2890 233 24.7 ey 1990 2529 115 2908 540(8) 3430 522 34.8 \

1991 2868 115 3183 3430 247 23.6  ?

NOTES:  ?~ #

1. CEPCO, installed capacity prior to 1983*

' will be as follows:

Big Cajun No.1. Unit No.1 - 115 MW ( ,

Big Cajun No.1. Unit No.we'2stern - 115 coal) MW (gas / oil) Big Cajun l

l Big. Cajun No. 2. Unit No. 2 - 540 MW (we' stern coal)

2. Indicates a surplus over the 15 percent reserve requirement.

3, 540 MW addition represents 100 percent ownership in Big Cajun No. 2. Unit No. 3 (west.crn coal).

4. 275 MW addition represents 51 percent ownership in Big Cajun No. 3, Unit No.1 (Louisiana lignite). Gulf States Utilities Company (GSU) and Louisiana Power &

Light (LP&L) have expressed serious interest in participation in CEPCO's lignite units. Discussions leading toward a decision of participation in these units are planned in the near futur6.,

i l 5. 275 MW addition represents 51 percent ownership in Big Cajun No. 4. Unit No.1 (Louisiana lignite).

' 6. Reflects a planned 30 MW decrease in available capacity from Big Cajun No.1 due to conversion from natural gas to fuel oil. -

7. 540 MW addition represents 100 percent ownership in Big Cajun No. 3 Unit No. 2 (Louisiana lignite). .

I 8. 540 MW addition represents 100 percent ownership in Big Cajun No. 4, Unit- No. 2 (Louisiana lignite). Participation arrangements have not been considered for this unit at this time

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I Table 4.1.B Cont'd

9. 45 MW firm p9rchase has been arranged from Tex-La/SWEPC0 in 1983. 100 MW nonfirm purr 'ase available from CLECO in 1983. ,

10, 50 MW firm purchase from Tex-La/SWEPC0 and 50 MW hydr,o pea, king capacity

have been allocated from SPA. .

11. An additional 15 MW allocation of hydro peaking power will be available from SPA. Lose Tex-La/SWEPC0 50 MW.

12. An additional 50 MW allocation of hydro peaking power (' total of 115 MW) will be. available from SPA.

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Ta bl e 4.1.C CAJUN ELECTRIC POWER COOPERATIVE, INC.

POWER SUPPLY PLAN FOR PERIOD 1983 THROUGH 1990 WITH RIVER BEND NUCLEAR UNIT NO.1 PARTICIPATION

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CEPC0 Purchased Net Generation Total Surplus System Load Capacity Responsibility Additions capacity Capacity Res~erve Year (MW) (MW) (MW) (1) (MW) (2) (MW) (MW) (3) (T) (a) 1493 275 (5) 1565 72 20.2 1983 1430 145 (11) 1984 T560 100 (12) 1687 1565 (122) 7.0

~ 5891 380 (6) 1945 54 18.2 1985 1701 65 (13) 2019 275(7) 2314 295 30.9 1986 1856 115 (14) 94 (8) 1987 2025 115 2214 94 (8) 2378 164 23.1 115 2425 275(9) 2663 228 25.3 1988 2209 2747 90 18.8 1989 2410 115 2657 n 94 (8) 1990 2629 115 2908 540 (10) 3287 379 29.9

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2868 115 3183

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3287 .-, 104 18.5 1991 NOTES: ....

1. Capacity requirement equals (load minus firm purchases) times 1.15 less nonfirm purchases.

2. CEPCO installed capacity prior to 1983 will be as follows:

Big Cajun No.1. Unit No.1 - 115 MW (gas / oil)

Big Cajun No.1. Unit No. 2 - 115 MW (gas / oil)

Big Cajun No. 2 Unit No.1 - 540 MW (western coal)

Big Cajun No. 2. Unit No. 2 - 540 MW (western coal)

3. Surplus equals total capacity minus net responsibility.

4. Surplus plus pool reserve as a percent of net responsibility.

5. 275 MW addition represents 51 percent ownership in Big Cajun No. 2. Unit No. 3 (western coal). Gulf States. Utilities and Sam Rayburn Dam Lthority have submitted a Letter of Intent to purchase 265 MW (49 percent) of this unit.

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Ta bl e 4 1.C. . I cont'd  : -. I

6. 380 MW represents 70 percent ownership in Big Cajun No.' 3. Unit No. l' l (Louisiana lignite). Other utilities have expressed serigus interest in' 1 participation in CEPCO's lignite units. Discussion leading tosard a ,

l decision of participation in these units are planned in the near future. j i

7. 275 MW addition represents 51 percent ownership'in Big 4C jun No. 4. Unit No.1 (Louisiana lignite). Similar participation arrangements as, described for Big Cajun No. 3. Unit No.1 are planned.

8. The three increments of 94 MW each represent participation in the 940 MW .

River Bend No.1 unit under construction by GSU. Based on information  ;

available. this unit will be commercial by the 1985 peak. The increments ,

shown represent the portion of this unit's capacity required in 1986, 1987 and 1989 to meet CEPCO's load requirements with GSU buying back the capacity I of the balance of the 30 percent cwned by CEPC0 during 1985, 1985, 1987 '

and 1988. - /

9. 275 MW addition represents 51 percent. ownership,.in Big Cajun No. 3. Unit No. 2 \?

(Louisiana lignite). Similar particintion arrangements as described for )

Big Cajun No. 3. Unit No.1 are planned. 'l  !

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10. 540 MW addition represents 700 percent twnership,in Big Cajun No._4. Unit No. 2 . i (Louisiana lignite). Participation arrangements have not been considered l for this unit at this time.

11. 45 MW firm purchase has been arranged from Tex-La/ EPC0 in 1983. 100 MW nonfirm purchase available from CLECO in 1983.

12. 50 MW firm purchase from Tex-La/SWEPCO, and 50 MW of hydro peaking capacity l have been allocated from SPA.

13. An additional l'5 MW allocation of hydro peaking power will be available from SPA,

14. An additional 50 MW alkocation of-hydro peaking power (total of'115 MW) will .

be available from SPA. -

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PROSPECTUS 1

Gulf States Utilities Company 500,000 Shares S.8.I.Y.

I Dividend Preferred Stock-S100 Par Value 1

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND>CXCHANGE CQMMISSION NOR HAS THE COMMISSION ,

PASSED UPON THE ACCURACY OR ADfQUACY OF THIS PROSPECTUS.

ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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i This Prospectus is to be used by the Company in connection with its public invitation for bids for the purchase of the above-mentioned Preferred Stock. The Company will receive bids for the Preferred Stock up to 11:00 A.M., New York Time, on January 17,1980, at the office of Irving Trust Company, A Level, One Wall Street, New York, N. Y. Officers and counsel for the, Company, independent public accountants and counsel for the prospective Purchasers will be av'ailable at the office of Irving Trust

• Company-A Level, One Wall Street, New York, N. Y., on January 9,1986, at 11:00 A.M., New Yo'rk' - -

Time, to meet with prospective bidders to review the Registration Statement and public invitation for bids. Copies of the bidding papers may be obtained at the office of Beekman & Bogue,14 Wall Street, New York, N. Y.10005, counsel for the prospective Purchasers. If the Company shall accept any such bid, this Prospectus will be amended so as to include certain information not now included.

l The date of this Prospectus is January ,1980 l

- . - _ - - -__ - -- _ _ _ - - - - - - _ - - __- -- --- - = ~ V W

borrowings which are expected to be retinanced from time to time through the issuance of additional bonds and common and preferred stocks of the Company. The amount of each class of securities sold and the timing of the sales thereof will depend on a number of factors including market conditions, earnings and capitalization ratios; and the issuance of additional preferred stock and bonds and such intermediate term borrowings will be subject to satisfaction of the interest and preferred stock dividend coverage requirements described below. The Company contemplates the sale of up to $100 million of First Mortgage Bonds early in 1980 and has received FERC authorization to se!! the same, but such sale is subject to the factors described above. Due to the Company's need to raise capital from outside sources for its construction program through the issuance, among other securities, of substantial amounts of additional common stock, funher dilution of earnings per share will be experienced at least for the near-term even if operating results should improve, particularly if current market conditions requiring such sales to be made at prices below book value persist.

The Company's Mortgage and debenture indentures place certain limitations upon me issuance of additional funded debt. On the basis of the unaudited financial statements of th'e' Company for the twelve months ended November 30,1979, (adjusted to give effect to the issuances on Deceraber 4,1979 of

$75,000,000 of First Mongage Bonds,12.30% Series A due 2009 and of the New Preferred Stock and the application of the proceeds therefrom to reduce short-term debt) the amount of funded indebtedness permitted to be issued under the more restrictive debenture indenture test (assuming an interest rate of 12.30% for such additional funded indebtedness) would be approximately $161,000,000. At present, only

$160,000,000 of additional bonds can be issued under the Mortgage limit on the aggregate amount of Sonds which may be issued thereunder. As of December 7,1979, the Company was advised by the t rustee under its Mortgage Indenture that the necessary consents had been obtained from the holders of i outstanding bonds to two mortgage amendments, one of which would increase the limit on the amount of l additional bonds which may be issued to $100 billion. The Company expects that such amendments ofits

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Mongage Indenture will be effected in the near future.

The Company's Restated Articles of Incorporation place certain limitations upon the issuance of additional preferred shares witho,ut appropriate approval by holders of each class of preferred stock outstanding. On the basis of the unaudited financiai statementai,ot' the _ Company for the twelve months ,

ended November 30,1979 (adjusted to give effect to the issuance of additional Bonds referred to in the preceding paragraph and the issuance of the New Preferred Stock at an assumed dividend rate of 104%

and application of the proceeds therefrom to reduce short-term si,e,bt) the amount of preferred stock permitted to be issued under the most restrictive provision (at an assumed dividend rate of 10h%) would be approximately $47,000,000 in addition to the New Preferred Stock.

If it should be determined that the interest charges incurred by certain trusts should be treated as I interest on indebtedness of the Company for purposes of calculating the limitations in the preceding two paragraphs, such limitations would be $133,000,000 and $24,000,000 respectively.

RECENT DEVELOPMENTS On August 28,1979 Cajtm Electric Power Cooperative, Inc. (" Cajun") and the Company executed a ,

I joint ownership agreement pursuant to w'h'ich Cajun will become owner of an undivided thirty percent .

. l mterest in the Company's River Bend Unit 1, a 940 megawatt nuciear unit presently scheduled to be in l service in 1984. Such agreement and funding of Cajun's contributions to such project are subject to I approvals by regulatory authorities having jurisdiction, including but not limited to the Nuclear Regulatory Commission and the Rural Electrification Administration. After approval, the agreement <

provides for Cajun to pay all construction costs until it has achieved thirty percent parity of capitalized l investment m the unit, and thereafter for costs to be paid by the co-owners in proportion to their interests.

An agreement' was also executed obligating the Company to purchase from Cajun after commercial operation of the unit 100% of Cajun's share of the unit's capacity during the first year,66h% the second year, and 33%% the third year. These agreements were executed as part of the overall arrangements between the Company and Cajun provene for new mierconnecuon anu nanamon agreements, for Latun to anume loaa sontrol responstbtitty for its system and t'or transfer hv the Company to G4un of l remonsibimv for me load of bouthwest Loutstana tdectne Membershm Coonmtive tmm which t_he 1

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l l Comnany receives less than FERC approved rates for comparable service. As a further part of these.

l arrangements me Lompany presently expects _ to parucipate ;n severai generanne umts to be budt W t

Cajun, including a 540 megawatt coat.nrea unit plannea wr commenon m 19R3 and three 340 megawatt hgnite units scheduled for service afar 'n the 19M01 On October it,1979, Sam Rayburn G & T. Inc., the rural electric cooperative affiliate of SRDE, joined in the River Bend Unit I joint ownership agreement described above. Pursuant to such agreement, Sam Rayburn G & T, Inc. will become owner of a seven percent interest in the unit subject to all necessary regulatory approvals. The Company and SRDE have executed a letter ofintent providing for agreements to be reached covering interconnection and transmission arrangements, wholesale service, disposTtion of hydroelectric power generated by the Sam Rayburn Dam hydro project, purchase by the Company of

_ decreasing amounts of River Bend Unit I capacity from SRDE, and opportunities for SRDE to participate in future units of the Company.

The Company's system peak load for 1979 occurred in August and was 5,224.9 megawatts, at which

"' time the Company had generating reserve' capacity of approximately 18% This represents an increase in peak load of approximately.l.7% over 1978. Although kilowatt hour sales for the twelve months ended

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November 30,1979 were approximately 3% greater than those for the twelve months ended November 30, 1978, the increase in such sales was less than anticipated. Indications are that mild weather in the summer i and fall of 1979 was a significant factor, and that energy conservation by consumers probably was an '

element,in holding the increase in peak load below the 6.6% previously estimated by the Company and in the less than anticipated increase in kilowatt hour sales. Due to deferral of certain construction work during various portions of the past few years and the current needs for generation and reserves,it is not anticipated that the lower than estimated increase in peak load will affect the Company's current construction projects.

Sabine Unit 5 has been placed in co1'nr'n ercial operation fueled by natural gas supplied by Exxon l Company, USA. The Department of Energy (" DOE") issued a determination on August 23,1979, that such unit will qualify as an " existing" facility under its rules. This makes the unit eligible to use fuel oil as fuel but an exemption from DOE is required M order foube Company to he able to use natural gas. An i application for such an exemption has been filed by the Company and under present rules permitting use l of natural gas pending a ruling on the application, the Company has commenced operation of the unit with I natural gas. However, it cannot be assured that it will be allowed to continue to operate the unit with natural gas. Applications have also been filed for temporary 'public ir.terest exemptions to burn natural gas in other units beyond the amounts permitted under the Power Plant and Industrial Fuel Use Act and pending action thereon the Company has endeavored to reduce the use of fuel oil and burn additional natural gas when available.

As a result of the accident at the Three Mile Island nuclear plant, the Nuclear Regulatory Commission

("NRC") has announced a moratorium on the issuance of construction permits and the licensing of nuclear power plants until it completes reviews of NRC staff proposals concerning operation of existing nuclear power plants, recommendations of the President's special commission to investigate the Three Mile l Island accident, and a special study of the NRC and its procedures, and promulgates new rules for j emergency planning for nuclear accidents. President Carter stated in December 1979 that the moratorium i would not last more than six rrionths thereafter. The Company has construction permits for its River Bend l Units I and 2. River Bend Unit 1, which is presently under construction,is scheduled for completion in 1984. While no impact is currently foreseen on the Company's present construction schedule, it is not l possible to determine the effect of the moratorium, or of any changes in the NRC or its policies which may result from the review or from Congressional or executive action, upon the construction and licensing of such units, the approval of participations in such units or the effect upon the Company's financial position or results of its operations.

Financial liesu'Its Earnings for the twelve months ended ' November 30,1979 were adversely affected by the lower than expected kilowatt hour sales referred to above as well as increased maintenance expenditures, which are expected to continue, and increased interest costs. In November 1979 the Company changed its composite 8

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