ML19308B210

Answer of Duke Power Co to Protest of Piedmont Electric Cities Against Duke Application for Licenses for Proposed Stations.Two Newspaper Articles,Affidavit & Certificate of Svc Encl

ML19308B210
Person / Time
Site:	Oconee
Issue date:	07/28/1967
From:	Grigg W, Horn W, Parker P DUKE POWER CO.
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912160122
Download: ML19308B210 (15)

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,' In the Ma::er of: ) DOCKET NOS. 50-269

) 50-270

, DUKE POWER COMPANY ) 50-287-i

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l ANSWER OF DUKE ?OWER COM?ANY TO

?ROTEST OF PIEDMONT ELECTRIC CITIES AG.. INST DUKE POWER COMPANY'S A??LICATION .-

FOR LICENSES FOR TIiE CCONEE NUCLEAR STAZON UNITS 1, 2 AND 3 i

j Applicant Duke Power Company, answering de Pro:est of Piedmon:

i Electric Cities in the above-enti: led ma::er, alleges:

(1) As to Section I of the Protest en:itled " Protestants", the factual allegations contained therein relating to the parties involved are admitted except as to the last two paragraphs relating to a "Ncn-Profit" Corporation, As to such Corporation, Duke Power Company has no knowledge or informa-g

} tion and, derefore, denies de allegations concerning it. Duke Power i

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Company further denies that any of the allegations in Section I have any j

. relevance to its application to the Atomic Energy Commission for a provision-1 l al egnstruction permit for the Oconee Nuclear Station Units 1, 2 and 3.

j (2) As to Section II of the Protes: entitled "The Apphcan:", it is ad-mitted that Duke Power Company, the applicant in the captioned proceeding, i

! is a North Carolina corporation with home office at 422 S. Church Street,

! s j Charlotte, N.C. , and that it is engaged in the generation, transmission and t

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distributian of electric energy in the Piedmon: sections of Nort Carolinu and Sou2 Carolina. It is also admitted that Duko Power Company, to-gather with the other three regulated, investor-owned, taxpaying electric utilities named in the Protest are parties to the Carolinas-Virginias Power Pool Agreement, which contrac has been duly filed by each of de four companies as a rate schedule with the Federal Power Commission.

It is denied that either Duke Power Company, individually, or the fou.r companies which are perties to de CARVA Fool Agreement have any monopoly on the generation, transmission or distribution of electricity in eiSer Nord or South Carolina. In Nord Carolina, none of de Company's franchises are exclusive because of a provision in the North Carolina constitutior1 against exclusive franchises. In South Carolina Se Federal Government, the State of South Carolina and several or its municipali:ies are engaged in the generation and sale of electricity. The Nord Carolina Utilities Commission and the Public Service Commission of South Carchn.

regulate the rates and service of the Company and grant it certificates of public convenience and necessity to serve in specified areas of both states, in order to avoid wasteful duplication of electric utility facilities.

All of the remaining allegations of Section II of de Protest are denied.

(3) As to de allegations of Section III of the Protes; enti: led "The s

Atomic Energy Act and the Antitrust Laws", i is admitted dat the Sec:icn correctly quotes certain provisions of the Atomic Energy Ac: of 1954. As to de quotes from Section 103 of the Act and from Sec:1on 182 d , which ex-pressly applies only to Section 103,, License Applications, it is denied that te s O

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-l. 1 thcy hava any application to Duke Power Company's license application in this proceeding, which is filed under Section 104b of the Act, and not under Section 103.

(4) As to Section IV of the Protest entitled "The Atomic Energy Act

- Does Not Authorize the Unconditional Licenses Prayed for Herein by Duke Power Company", it is admitted that Duke Power Company has not offered the opportunity to participate in the Oconee Nuclear Station Units 1, 2 and 3 to the Protestant Nori Carolina Piedmont Electric Cities, or to any other unregulated, tax-exempt supplier of electricity.

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! It is denied that any provision of the CARVA Fool Agreement is de-signed to exclude any electric system of sufficient size to n;ake a signi-

! ficant contribution to pooling and to have need for the services offered by i

I the pool members to each other. In general, small electrical distributing J

4 or generating systems do not meet these essential qualifications for ef-

ficient pooling. It is further denied that Duke Power has refused to wheel power to the Non-Profit Corporation referred to in the Protest, as Duke Power Company never heard of this Non-Profit Corporation prior to reading the Protest filed by the Piedmont Electric Cities in this proceeding. It is furier denied that Duke Power Company has refused to wheel power to any-I j ,

ene, the fact being that Duke is now wheeling government power from the Cdrps cf Engineers' Hanwell and Clark Hill hydroelectric projects on de

! Savannah River in South Caroline to preferred customers of the Sou2 eastern

! Power Administration, power marketing agency of the U. S. Depanment of I

I the Interior, including the' Protestant Town of Drexel, N.C.

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I:is funher denied that Duko Power Company has notified Protest-an:s that it might increase their rates.

Neither the Protestant, Piedmon: Electric Cities , nor the Non-Profit Corporation Sey say they intend to form, has requested the Applicant Duke Pcwcr Company to wheel power to them or to share in or purchas.e power from Duke's Oconee Nuclear Station.

It is denied that the issuance of the provisional construction per-mit sought by Duke Power Company in this proceeding would in any way tend to restrain rade or violate any ar.:itnist laws. :: is further denied tha: 2e anti: us: laws, of 2e United States or of any State are broad enough to force a regula:ed, taxpaying, investor-owned utihty company to go into pannership or tenancy in common or join: ownership of its mcs:

efficient and economical generating plan: wi2 a tax-exempt, unregulated electric system, or to sell such a tax-exempt, unregulated organization a po: tion of such generating plant. To do so would constitute illegal discrimination against the other customers of the utilie.y company, in violation of Part II of the Federal Power Act, and the public utility laws of Nor:h Carolina and Sou2 Carolina.

'5) Sec:icn V of the Protest contains no allegation of fact requiring answer by Duke ?cwer Company, t

Funher answering de entire Protest, Duke Power Company avers:

The Protest is totally withou; meri: and the relief sought therein mus:

be denied as a matter of law. The essential question it raises is the ex ant to which the Commission is given the authority and responsibility under the

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Atomic Energy Act of 1954, os amended, (the Act) to determine questions

and to take action under the antitrust laws in respect of nucicar electric I generating facilities. The per:inent provision of the Act is Section 105 I which is set forth on pages 9 and 10 of the Protest. This statute, which l

makes certain federal antitrust laws applicable to nuclear facilitics, i

I clearly divides the authority and responsibility for investigation and l

enforcement between the Commission and the Department of Justice. The lr l jurisdiction of the Commission is limited to only three situations. First, ,,

l it may " suspend, revoke, or take any other action as it may deem neces-j sary wid respect to any license issued by the Commission" when a li-l censee is found by a court of competent jurisdiction to have violated any I

j of the provisions of the federal antitrust laws referred to in Section 105a 4

l of the Act. ' Second, the Commission is required by Section 105b to report  !

I promptly to the Attorney General any information it may have with respect j

to any utilization of special nuclear material or atomic energy which ap-pears to violate or tend toward the violation of any of the acts referred to  !

! l in Section 105a, or to restrict free competition in private enterprise.  ;

' l Third, it is required to notify the Attorney General of certain licenses it may propose to issue under Section 103 of the Act and of the proposed terms j and conditions tereof for a determination of whether such licenses would I

i tend9 to create or maintain a situation inconsistent with the antitrust laws.

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i, In the absence of a finding by a court of competent jurisdiction that l the licensee has violated any of the antitrust laws, it is clear that in a I

{ proceeding before the Commission for a construction permit and operating license under Section 104b of the et the Commission has no authority to a

j deny or condition the issuance of a permit or license based upon antitrust j

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j allegations . Section 7(c) of the Atomic Energy Act of 19'46 required the Commission to consider antitrust issues in licensing matters, but this provision was excluded from the Atomic Energy Act of 1954.

l In this case, the jurisdiction of the Commission under the provis-l ions of the Atomic Energy Act and AEC regulations issued thereunder ex-tends only to matters involving the protection of the health and safety i

j of the public and the common defense and security. A notice of hearing 1

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.was issued *.under date of July 27, 1967, in which the issues to be -

i i considered were specified. None of these issues pertain to matters I

raised in the protest.

} That the Commission's jurisdiction in this case is limited to these issues is rqade clear by the terms of the Act. For example, Section 104b

} provides that in issuing licenses thereunder the Commission shall "im-i pose the minimum am'ount of such regulations and terms of license as will

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I l permit the Commission to fulfillits obligations under the Act to promote i

the common defense and security and to protect the health and safety of the public . . ." (emphasis supplied).

The Commission's regulations evince consistent interpretations of the Act limiting the Commission's jurisdiction to the matters set forth in Section 104b. See 10 CFR Farts 2, 20, 50 and 100. And in regulatory e

adjudications involving Section 104b construction permits and operating licenses the Commission has held such matters as thermal effects, seg-regation and aesthetic, recreational and land use values of lakeshore i environs to be outside its jurisdtetion. See In the Matter of Tersev Central l

! * 'See Federal Register, Vol. 32, No.144, page 10996..

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l'owar and T.icht Company, 2 AEC 446, 447; In the Matter of Niagara Mohawk Power Corporation, Initial Dccision, pp.11-12, April 1,1065, 3 AEC  : In the Matter of Concolidated 2dison Company of New York, Inc. , Memorandum and Ordor, November 24,1965, 3 AEC  ; and

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In the Mattar of Wisconsin-Michigan Power Company, Order Denying Intervention, June 20,1967, 3 AEC .

The law and regulations applicable to this matter are, in fact, so clear and unequivocal that it can only be concluded dat the Protest is ..

f:tvolous and was filed solely for the purpose of delaying the Oconee project in crder to coerce Duke ?cwer Company into an unjustifiable re-duction in its wholesale electric power rates. As stated in the Protest, each of the protestants is a wholesale cus:cmer of Duke Power Company, and inform'ation has been widely disseminated in the press and otherwise that they plan to institute proceedings before the Federal Power Commis-sicn for such a rate reduction. See Exhibit A of this Answer. That the desire for a rate reduction is the sole basis for the Protest is made ex-plici in de Pro:est where it is sta:ed on page 12:

"therefore, the granting of -die relief prayed for in this Pro- '

tes: is an appropriate way to bring abou: a substan:ial re-duction in Protestants' cost of bulk power, to which Pro-testants are entitled".

This is a maner properly to be presented to de Federal Power Commission, not 63

• Atomic Energy Commission.

Counsel for Protestants must be aware that the matters they have raised and Se auderities they have cited are elier outside the juris-diction of te Commission or irrelevant to the current proceedings. For

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example, See!!cn I (pages 1 - 5) of the Protestants' brief recitos a*. lone;th ie dollar value, cost per kwh, and total kwh purchused from Duko ?cwcr Company. They propose to "save an average of more thun t.irco milis act kilowat hour on every kilowatt hour purchased" by forming a tax exemp:

ccrporation ("Non-Profit") to finance (ircugh tax cxempt acnds) the "pur-chase of an appropriate undivided interes: as tenant in common withou right of par.i: ion, in the Oconee Nuclear Station, Units 1, 2 and 3" . ?cwer would be purchased by Prctestants from "Non-Profi:" at cost. They ask that this arrangemen; be made a condition of the Oconee heenses. How-ever, they ci:e no audority wh;ch would enable the Commission to :mpose such a condition. Moreover, they provide no basis whatsoever for Seir cententions regarding tne ces: cf Oconee ?cwer. They ignore the fac: tha:

day now c5tain power at the lowes: cos of any class of Duke cus:cmers and at a rate which is among de lowest in the nation. Surely, the pre-sumption must exist that any economies resulting from the Oconee projec will be shared by the Protestants as well as by other Duke customers. In any even:, de question of wholesale power rates is reserved for the Ped-eral Pcwer Commission.

Sectica II (pages 5 - 7) describes Duke Power Company, its service area, de Carolinas-Virginia Power Pool (CARVA Fool), and the CARVA Pool contract. Allegations are made ist the CARVA Pool contract is monopolistic.

These allegaticns, heretofore denied, are for de reasons hereinbefore sta:ea, ,

1 not relevant to this case.

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In Section III (pages 7 - 11) the Protestants cite " Congressional declaration of policy" that atomic power "shall be directed so as to pro-moto world peace, improve the general welfarc, and strengthen frco com-pethion in orivate entercrise."* They fail, however, to reconcile the proposed formation'of a non-taxpaying corporation to be known as "Non-Profit" with de objective of the Atomic Energy Act "to strengthen . . . -

private enterprise" - - perhaps dey cannot.

l Thereafter (beginning at &e middle of page 8 and continuing $ rough-tie middle of page 11) Se Protestants cite a laundry list of irrelevant er immaterial sections of the Atomic Energy Act. For example, de Protest-i

, ants quote at length the provisions of Section 44 of the Act. On its face I

i Section 44 applies cely to electrical energy produced in facilities owned by the Atomic Energy Commission. Oconee is wholly owned by Duke Power Company. To t./ to rationalize the relationship between Commis-i sion owned facilities governed by Section 44 and the Oconee project I

would be an exercise in futility.

Further, the Protestants cite and quote from Section 103 of de Act, and from Section 182d, which expressly applies only to Section 103 license applications . The application for de Oconee licenses was filed under Section 104b, (which is acknowledged on page 1 of the Protest) and not ,

i l under Section 103. Counsel for Prctestants must be aware cat on Decem- I ber 23,1966 in Docket No. PRM-102-3, 3 AEC , a petition that de Commissior. make the required findings that would enable Section 103 li-

! censes to be issued was denied. ,Accordingly, at the present time, no l license may be issued under Section 103.

• Underscoring supplied by Protestants ,

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. In Section IV (pages 11 and 12) the Protestants refer to an " exclusive privately-owned nuclear club", implying a discriminatory condition which does not exist. Moreover, the statement that " Duke Power Company has notified Protestants that it would not reduce their wholesale rates, but might on the contrary increase them" is not true.

In Section V (pages 12 - 14) the Protestants request that the Commis-sion attach conditions to de Oconee licenses to require partial ownership and oder participation by the Protestants in de Oconee project. The Prote'stants also request a public hearing upon the matters set forth in the Protest. No sta=tery or other authority is cited in support of either request, and there is none.

WHEREPORE, having fully answered the allegations contained in Se Protest and for the reasons set forth herein, Duke Power Company, as ap-plicant in the captioned proceeding, requests that the Protest filed in said proceedings be summarily dismissed and the relief requested in said Protest be denied.

Respectfully submitted, DUKE POWER COMPANY By A- -

- , Execurrie Vice President

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Ca-1 Horn, Jr. ./

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Roy 3. SJiapp M.

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Attorneys for Duke Power Company , -10 ,.

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" Ex.hibit A

.. ~ STATESVILLE RECORD .

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E:cycn citics in the Piedmont . , ,

arca with municipal cIcc:ric '

systems met here ':*aursday to .

. . discuss a proposed a c t i o n 9* .-

sgainst Duha Power Cor.pany for the purpasc of trying to ct ,

reduced whoicsale electric fatos. -

The tous represented were:

Statesville. IIigh Poht. Lexing-ton. Newtoa, Lbcolr. ton. Shc;by.

Cornc!!ns, A!bemt.dc. Montcc.

• Granite Falts and Drexcl. Gov-

. -, crning bodies in cach of these

- towns have passed resobtions .

.5 .I authorizing the fi:in: of 3,,cpr;1-

,pbint with the Federst_P2sy, ,

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against -.D..ek.o.

At the meetin; yestceday. cf . ,

, fic!Ms discussed possibic p!

ss of netion er.d agreed to mcct a:ain or m ke a further an.

nouncement in about 33 days. -

It is expected that a forma! * .

comp;; int wi;l be filed as soon *

• as the citics ;ct comp;cte!y '

cr:anized for the cetion.

s Crgcnization .

Officials yesterday decided to fune lon under the name Pied- .

mont E:cetric Citics Assochied.

They named general cour.sel g consisting of Jack R. IIarris of St:tesville. Joe Tally of Fay. -

ettevilla and Spencer Recder of

' W:shington.

• They plan to press a two .

. pronged attack ag: inst the powcr comp;ny to obt:In t.ot cMy whst. -

• . they regard as a more c:;uitabic rate structure but chan es in the -

. distribution set up as wc!I. ,

• The group elected officers as ,

i followst Mayor J. Garace Ba:-

- =al of Statesville, choirmant

• Kno:c Wa;ker, city attorney cf II!gh Point and Phin !!orton.

• city mans:cr of Shciby. vica ,

chairment Jack Nccl. city man- ,

- ager-of Albemar:c. sccrctary:

1. *- Euger.4 T. ?.iorris. city mana:ct '

- of Lexington. treasurert and

• Mrs. Pau ctic II. Blackwc: der ,

.t e. ... m a..;.e.u t ,,cca.

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L1 All tha c cetd c cc:

rgy cutput wculd g, into Duke's own sys- .

by CI:y Counci!, meet!:;> d:cated that they the would group fi!c a :cm of cci!!cs t:e systems initidly of cther!s. m- '

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hid sessie: 3: cod 1.y d;ht, g=u;::ne:edy with tt rate compta::c case a;stast terst.tc  ;;ivate pcwcr ,ccmpan- ,

g chd:e:ge w;;;gc {N '"h.,.27 . r.

the :es was wh:ca Duka :s 1 :ercu- -

picfman: "de:tde" citics, Commissica. Duke befcre Federal ccte -

Pow.

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g:: sin; canc a sur;dse sw : c,i,:ch; er.:c:q The sur;dse The cit'es' p ctest alle; s 1 "I :.# 'I"'.'

cc;y  :::g swdc,a in stra-sc..:cd their cwn by ~[1N25

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:ct elec:dc rates tory, which wn1 ;;:02 the case tht, unde: Sc A*cmic Ene systems 37 . . l."7 puke ?cwcr Company. bdcre es A'omic Enc gy Com-lAct, it wedd be us! .wfd1shre ic c!' e sc..,.!T'.r .. ' ""C -

w:: dec:d:d upc rcqt:na /iEC ta issue !! censes to! i n by $ue$"'['!".'..,b', -

~ una .imcus vcte, ccuncil i i l do cis udess such 11'

.! Se governing bdies cf m ss on, k ti --

c=scs :: quired Duke to pc mh'

c:her citics;otcs: in cumoridag,een:!y to !: a st :.te;y me .! g in St:t these citics to cwn and usc of .

by PECA's east counsc Du e.to : p=y.

Tu c;t e3 e y "a..( ' , 8P.

s S:::cs esvina, according to Shc!by fair shara cf this atomic gancra- '

d:cwed to .~.". : '

lPJagtefere thecf 1*aite a fermd ;d fil.. tion of ele:tricity. C2e: wise, newplanthc#~~f"!.'..u"' *TP,

h.ie E e : g y C:mmissic: ,3Iaycr a hu5c Huber:

n.:: ship and Plaster..st ccat c! of d.i .

the ce w I!censin; as-dev C <,-.' .a cf

. pense and ce " 'b

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rea::ct gene:Mors pry ed-aw applic:::on bm with,ldt.~ w=e-e.a.lcw-suca generatica woum rest:m u

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.d by D,, uke ?cwer'yCr Co..m/.be a e..,y e --a

• a".cwed to 2cacyed ['-[~ $'e #

. Carc.. a. ,mg p! ant, at a cost of over $3d f:cc ccm:ctition l I

and {discdmi tendticto. vio l the " Pled =o t iminic , !: Oconce County, S. C.1::e utitrust laws. - ^

• Vad Slaca and .:2 pews es This :cw mcVe, as exp!d:ed .

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.j c:d: CI:les Assoc!:2d." .

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t ies .c Jani:e into a ec .ptclit'

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a shste in da new generating c Vaca'*0 and was 3 7 faciity. The ficar.;ing Of this fer sic: day :!;ht<3 ht;ej;

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purc=se wedd be thrca;h ra. 10 2

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I c:0 cSer Ecm cf 1.cs

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!!:st pract!:d effect w:u i he C'* MCmc0 S rcVier/ stu; b

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. *- th th2se citics C0uld cbtai.t FC  : cf :ha city w a'::'.ang Sc!: er syste.~..s .~. e.. - . .. .~.s ~

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un may ha h::c c g l

- 08. $303:s in Se re; :t,

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whc!cs:!e ~eswer :cqu!:emen:s . t - rates fer custen;;3 3 s wcu:d stin be purchsed from , ' s.IH ud cuts'de Se c,z Dukc at wh:cver den ::i;ht j hans.

l ,c Se tha 1:wful and approved I, .

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AFFIDAVIT f COUNTY OF MECKLENSURG )

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?ctsonally cppeared before me, 3. 5. Parker, who being duly sworn, 1

I says that he is an officer of Duke Power Company, to wit, its Executive Vice President; dat he has read and is audorized to sign the foregoing 1

j Answer; and dat is statements contained mercin are true to the best of

l. his knowledge, informatio.1 and belief.

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B. 5. Parker Sworn to and subscribed before me dis 28th .ay of July,1967. .

%7t mN.,r.;.h. / .k /

Notary Public

.1 My Commission expires:

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UNITED STATES 07 AX2RICA j ATOMIC INIRGY CC 22SSION . .

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j In the Mat:e of ) Docke Nos. 50-269 (Unit 1)

) 50-270 ("ni 2)

DU'.<I ?CWER COM?ANY

) 50-287 (Uni: 3) l -

. )

4 (Oconce Nuclear S:stion, )

Unics 1, 2, and 3) )

'1 CERTIFICATE OF SERVICE I! I hereby certify that copies of the " Answer of Duko ?ower Ccmpany :o Pro cs:

l . '5f Piedmon: Electric Ci:1es Agains: Duke Power Company's Application for i Licenses for the Oconee Nuclear Station Uni:s 1, 2 and 3,'? da:cd July 25,

'j 1967, in the above-captioned matter, were served upon :he following by deposi: in the United States Mail, first class or air = ail, this 25th day j

of July,1967:

'I Samuel W. Jensch, Esq. Thc=as-F. Engelhardt, Esq.

U. S. A:omic Energy Commission Trail Counsel, Regulato:y S:sif U. S. Atomic Energy Cc==ission ij

• Washingt on, D. C. 20545 Vashing:ca, D. C. 20545

!l Dr.' John P.cary Buck The'Budd Cor.pany Stanley T. Robinson, Jr.

', Phoenixville, Pennsylvania .

- Office of the Secretary U. S. A:omic Energy Commission Washington, D. C. 20545

,; Dr. Hugh Pa

c:on .

r,! Los Alamos Scientific Laboratory U Les Alamos, New Mexico Jack R. Harris

• n' Suite 207 b Dr. Clarke Willia =s Stingson-Wagner 31dg.

ij Deputy Director Statesville, North Carolina i: 3rookhaven National Laboratory .

Upton, Long Island, New York .- J. O. Tally, Jr.

?. O. Drawer 1660 A. A. Wells, Esq. Fayetteville, North Carolina

.)

Chairman, Atomic Safety l and Licensing Board Spencer W. Roeder U. S. Atomic Energy Coc=ission - Spencer Building Washington, D. C. 20545 St. Michaels ,- Maryland 4 .

1 -

?

krq I-..... .- .. fj)?/ .. .

Wi liam H. Grio .

l 1 .

Accorney-at-Law

. .s . c , ,

i "6

9 L. I _

. ., 'm m

, .. . ~

, ,, .p, UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of ) Docket Nos. 50-269 (Unit 1)

) 50-270 (Unit 2)

DUKE POWER COMPANY ) 50-287 (Unit 3)

) .

(Oconee Nuclear Station, )

Units 1, 2, and 3) )

SUPPLEMENTAL CERTIFICATE OF SERVICE I hereby certify that copi.cs of the " Answer of Duke Power Company to Protest of Piedmont Electric Cities Against Duke Power Company's Application for Licenses for the Oconee Nuclear Station Units 1, 2, and

~ 3 " dated July 28, 1967, in the above-captioned matter, were served on

• July 28,1967, upon the following persons in addition to those listed in

" CERTIFICATE OF SERVICE" dated July 28, 1967, by deposit in the United States Mail, first class or air mail:

Honorable Robert E. McNair Reese A. Hubbard Governor, State of South Carolina County Supervisor The State House Oconee County Columbia, South Carolina Walhalla, South Carolina l

W' liam H. Gri 6L -

At orney at Law N

L -