ML19308C003
| ML19308C003 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee, Crane File:NorthStar Vermont Yankee icon.png |
| Issue date: | 10/13/1976 |
| From: | VERMONT, STATE OF |
| To: | |
| References | |
| TASK-TF, TASK-TMR 4115, NUDOCS 8001170744 | |
| Download: ML19308C003 (13) | |
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4 S'J ATC OF VEICKIFt PUBLIC SEINICE IKEltth #
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i No. 4115 kllh In re: Investigation of X
outage of January-February, X
1976 at Vernont Yankee X
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Introdtetion The Findings and Order to follow conclude this investigation. Pre-liminary to the Findings, however, the Doani will make sac evidentiary rulings j
so the parties will know i.In Pecord on which this decision ins 1cen based.
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'lin Doani adntits Public Exhibits 20, 30, 31 and 32.
It lus read all l
of the exhibits and has ignored any nurkings that may be on these exhibits.
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%c Doard takes judicial notice in Docket 3642 of Public Exhibits 11-17 inclusive, and the examination of Mr. McKibbon on June 5,1973, tin FPC
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Form One for 1975 for Central Vennont Public Service Corporation (CV), Green fbuntain Power Corporation, Washington Electric Cooperative, Venont idicctric i
Cooperative and Vernont Yankee Huclear Ibwer Corporation (Vernont Yankee), the i
Form 1-M for 1975 for Burlington Electric Light Department and tic PSB Annual i
l Pcport 1.or 1975 for Lyndonville Electric Departnent.
FIllDIHGS The Dcurd nnhos the following Findings:
1.
It affinns and adopts as its own, without necessarily relying on I
j the citations, the following proposed findings of the Public: 1-0, 10-23, 25-81, i
94-97,99-101.
2.
It affirns and adopts as its own, witlnut necessarily relying on i
the citations, the following proposed findings of Vernont Yankee-CV-Vertont Electric Power Comany, Inc. (Volco): Part A, 1-17, 19, 21-33, 35-42, 44-49; i
Part B,1-21 (#1), 22-48, 51; Part C,1-6; Part D,1-3; Part F,1-11; Part E, because of the argununtive language used in these Findings and because to the extent that they are relevant, they have been ruled on elsewhere, the Board does not find it necessary to affirm or adopt these Findings.
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It affirms and adopts as its a/n, without necessarily relying on f
the citations, the following prolosed su plenental findings of the lxiblic:
c with respect to the testiraony of fir. IJooracm, firxEigs 1-4; with respect to the i
second set of proposed supplerental findings, findings 1-7, 10-13.
4.
It affirms and adopts as its own, witlout necessarily relying on the citations, the following proposed findings of GIP: 1, 2, 3, 4, 5 and 6.
5.
It finds that the conduct of the managerent of the affected Vernon :
utilities was reasonable during the design and oteration of Venaont Yankee, including tM action taken to shut down that plant in Jaintary,1976, and that the purchase of replacemnt parr as a result of that shutdown was reasonable managerunt conduct.
6.
It finds that rates charged as a result of costs incurred because of the January-Feburary,1976 shutdown of Verront Yankee are just and reasonable and not in violation of any applicable law.
7.
It finds that this investigation, by agreenent of counsel, did not address any questions regarding the costs associated with tin outage of f brrirnck 32.
All Proposed Findings not adopted or affinied in these Findings or the Discussion and Order to follow are rejected.
DISCUSSIO4 Jurisdiction This case involves three basic questions: (1) uhouler the acts of nunagenunt of Verront utilities unnecessarily caused Verront Yankee to shut down in January,1976, and tlereby caused Verront utilities to incur unnecessar,(
expenses; (2) whether those expenses which were incurred as a result of the shutdown kure reasonably controlled through the purchase of tle nost econonical l
replacenent tower available; and (3) whether costs associated with the aforesaid shutdown should be passed on to Vermont retail ratepayers through rates subject to the jurisdiction of this Boartl.
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Since resolution of tir first question necessarily involves reexamin--
ation of issues relating to tln design and operation of tin suppression contain-nent system at Verront Yankee, Venaont Yankee argues that the principles of collateral estoppel, federal preenption, primary jurisdiction and caaity oust this Board of jurisdictim. The Board disagrees.
The doctrine of collateral estoppel bars relitigation of those issues and facts which were concluded by the earlier litigation. This Board is unaware of any issue or fact in the prior proceedings concerning the reasonableness of the conduct of managment of any utility in the design of or the operation of Vennont Yankee. Wat Vennnt Yankee proposed a design which ultinntely was accepted by the Atomic Energy Camdssion (AEC) is not proof of reasonable conduct of manageroent but obviously has sac Iraring on it. The reason nnnage--
nent cannot be inmunised curely because they satisfied NC reauirencnts is that they owe a different duty to this Board and to their ratepayers and are tierefore judged by different standanis. The infirndty of the utilities' argunent is in effect adndtted by them when they concede in their brief (CV-Yankee-Velco brief) that the Price-Anderson Tct penaits actions against a nuclear plant, ever, if the plant conforned to federal specifications.
The utilities go astray in t'leir argurent when they postulate that this Board is in effect attenpting "to inpose a penalty...for constructing (a) plant approved by (the) AEC and for shutting down in capliance with federal law."
Yankee-Velc M brief, p. 12.
That is a ndsstalcr.unt of this l'itigation, This Board is investigating whether in fulfilling tle aforesaid "requirments,"
utility nunagenunt fulfilled, their obligations to this Board and to their I
ratepayers. For the utilities to rely on their operating license as proof positive of reasonable conduct is bootstrapping and annunts to no unre than saying that the ADC in effect assured that nanagenent fulfilled its obligations l
to this Ibard and to their ratepayers.
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Utilities are expected and obligated to produce safe and reliable electric power at'a minimum cost, in the long run, under officient and econanical r.anagenent. The Board is obligated to plan for powr supplies under the sarac standard. It is obvious that VerTmt Yankee or any other applicant for a nuclear power plant license could have satisfied NE requirarents without satisfying the requirennnts for mininun cost power in the long run.
With respect to the rennining argunents that this Doard does not have jurisdiction, they, like the collateral estoppel argununt, proceed fran a mis-staterent of 'the questions involved in this litigation. What the Board has stated heretofore applies equally to the argurents involving prifaary jurisdiction, federal preer.ption and comity. Those legal theories are inapposite to this litigation.
Standard of flanagc.aent Conduct The testinony of witnesses McCarthy, Wnders, Kaufnnn and Chaney supports the proposition tlutefficient or reasonable nnnagenent conduct is a precondition o f the right of a utility to inpose costs on ratepayers. This is in accord with Verwent law. Ibtition of New Dyland Tel. & Tel (h,115 Vt. 494, 513 (1949).
Since it is the authority to irrose costs on ratepayers homver, that arises from reasonable nanagenunt, the test for allowing costs for rate purpose s is one test of reasonable managenent. On the issue of costs, the Suprene Court ha :;
stated that (1) good faith on the partof managenentis prestnred and (2) costs or expenses should be allowed unless it clearly appears they are excessive or unwac-ranted or incurred in had faith. Id., p. 511. In Carpenter v. Hate Telephone Co.,
l 122 Vt. 50 (1960), the Court stated "perrtissible actions of a capany become unlaw i
ful only when they pass the recognized bounds of operational nunagenent and over-stop the limits of reasonableness." Tir Board concludes that a standant of reasonable conduct under the circumstances is required, with certain evidentiary considerations such as good faith presunption and a necessity for a clear showing, fin order to prove unreasonabic action.
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i Purcluse of I?cplacement Puer Mr. McCoy, President of Velco, testified as to the manor of purcilase and cost of replacenent power. Ib evidence was intruluced that tic replaca. cat power purchases were otler than at the lowest cost under tle circutistances.
i Ib cross-exanination of Mr. McCoy or otler evidence inmached that conclusion.
'1he Doani finds that the replaccirent powr purclused during the Janu-3 ary-February,1976, shutdown of VenTont Yankee, was at the lomst cost available under the circumstances and that the Vermnt utilities acted reasonably in l
purclusing their replacenent power through Velco.
Original Design of Vert,ont Yankee Witness Ichfeld for the Public contended that engineers responsible for the suppression containm2nt systm deviated frm aIplicable engineering standards by failing to take into account certain hydrodynamic loads associated with pool suppression phenonenon. Witness Cooper disagreed with this conclusion i
and stated that theru was adherence to all arplicable engineering standards.
In weighing the testimony of these witnesses, the Board uses the stand-ard criteria of the qualifications of the witness to testify about tle subject matter, including his experience in the field, his ability to personally give opinions and render julgnents based on his personal involverent rather than as an expert retained only for the purpose of litigation, personal or professional bias, and his doncanor while subject to examination.
Dr. Cooper lus extensive l cxperience in the problems of pressure vessels and other aspects of nochanical engineering as they relate to nuclear lu er plants. Etr. Inhfeld has almst no experience in designing nuclear Incr plants.
Dr. Cooper was personally invohul with over 100 nuclear powr projects,1cfore, during and after the tire i
Vernont Yankee was built, whereas Mr. Ichfeld lus spent very little of his pro-fessional life dealing with engincering problems associated with nuclear powr.
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I Dr. Cooper was essentially sitting in judgmnt of himself and his peers wlnn he opines there was no deviation from professional engineering standa1xis during th design and operation of Vernent Yankee. tir. Ichfeld was essentially relying on-a review of the literature and his judgnent as a nechanical engineer when he opined there were deviations fran applicable standards. Finally, the Boanl found both witnesses to be candid in their opinions.
fir. Ichfeld relied alnost entirely upon the published literature of the llumboldt Bay and Dodega Pay tests to support his opinion tlut there was a
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departure frcm standard engineering practico during design and design review of Vermont Yankee. Ile further opined that the Ar.nrican Society of Mechanical Pagineering (AS?E) Pressure Vessel Code was inapplicable, although it appeared in many docunents as being the standard to which a design should adhere.
T.,
9-15-76, pp. 51-53.
Dr. Cooper, who had substantial responsibility and involvenent in tin authorship and policy set forth in tlut Code, disputed this contention and stated that the Code was applicable in 1967 when Yankee was designed.
T.,
9-17-76, p. 23.
Dr. Cooper went on to explain the rationale of this approach by stating that pressure vessel experience in other industries was sufficient in the judgnent of those designing the containnnnt vessel to permit the use of the standard pressure vessel rules in designing containnent structures.
T.,
9-17-76, pp. 89-92.
Neither lir. Lohfeld nor anyone else challenged Dr. Cooper's testinnny on these points.
The question thus presented is whether the failure to utilize the infornation in the literature was a departure trou standard engineering practice; that is, despite the use of the M4E Pressure Vessel Code and other stancards as a insis for design and design review, should the pool swell plenonenon have been accounted for? Dr. Cooper stated, losed on tle evolution of design of nuclear power, this phononenon was not even a concern.
Ibid. Tie Board agrees with this conclusion, especially in the absence of any evidence to the contrary,
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First, the Bodega Bay test results, at least in part, are referred to and relied upon by Venont Yankee in its license application to the ADC.
Public Exhibit 29, p. V-2-ll.
This indicates that Yankee and all otler parties were aware of testing at Bodega Bay and believed it had sorno significance. Secondly, this Board is aware of the significant contest (vitich is still going on) relatirg to the. issuance of Vermont Yankee's operating license.
It is difficult to imagine and understand why not only tle proponents of this application'would fail to detect this phenorienon if it wem so well understood, but why neitler the vigorous opponents nor tle reviewing agency itself found this antission.
This Board is aware of the manifold isstes in all areas of utility engineering research that are reported on daily and monthly in tle technical journals.
Gomo of tluse areas will undoubtedly turn up problems that will require " redoing" that which has been done by some utilities. That " redoing" does not nean, lanver, that what has been done necessarily was a departure from engineering standanis, altl ough the " redoing" was nuntioned previously in tic literature.
On the basis of this Pecord, the Boani finds that the nanagement of Venunt Yankee (andall otlur involved Vernont utilities), engaged in reasonable conduct during the design and design review and construction of Venont Yankee, insofar as it relates to the pool swell phenomenon issue raised in this case.
'1ho Board further finds that the proposed Rules of the ALC,-which 'that Agency adopted several years after issuance of the construction permit and one year after the Final Safety Analysis Report (FSAlt), do not irpeach Dr. Cooper's
)- / approach.
It is questionable whether this Board would luve found le, gtaken by Vermont Yankee 01
, the irqnct of which would be to add substantial costs which ultirntely would be borne by N
ratepayers.
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The coi clusions of the Board should not be construed as meaning that f
this Board believes that all parties involved in the design review and construc-tion of the suppression containment system lived up to their obligations.
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g fact, serious questions have born raised in our mind about the responsibility of at least General Electric Coi.pany, who apparently was responsible for the nuclear steam nupply system, which includes the suppression containnent system.
Decause of this concern, the Board finds that Vemont Yankee should vigorously pursue any renedies it may have against any parties responsible.
It shall keep the Board advised of any action taken and of any results obtained.
Tinely Solution of Suppression Containnunt Problem The Public, through Ilr. Swales, argues tlut Vermont Yankee departed frora standard engineering practice, in failing to recognize it actually had a safety problem which muld have to be corrected, in failing to inplenent a solution to that problem in' tinely fashion, and in failing to hecp the power plant running once it found a solution to the problem tlat could be irrplemented while the plant was in operation.
Mr. Keenan, who was annng those responsible for analysis of the problem and for making recormendations to nunagenent, dis-putes Mr. Swales.
Dr. Cooper, involved as a consultant during the analysis of this problem, disagrees with fir. Swales. Wis issue, like the earlier issue on design and design review, involves weighing the testir.cny of the witnesses, which the Board will analyze in the sann fashion.
Iir. Swales did not have the e>qrrience that flr. Ibenan had in dealing with this problem, nor does his past experience equal fir. Keenan's in terms of responsibility for dealing with operating problems at a nuclear pcmr plant.
Whernas fir. Keenan is obviously sitting in judgnent of hiluself and his colleaguas, Mr. Swales has no significant personal interest'in the outcane of this litigation.
Dr. Cooper, while not' as intimately or innudiately irwolved as Mr. Keenan, certainly has nore experience than Mr. Swales, bu' also should be considered a peer of Mr. Keenan for the purposes of judging ar y persot 11 or professional bia: ;
or interest he may have in this litigation.
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o The Board finds that Pr. Swales was soindiat contradictory in his approach. First, without conducting a cost-lenefit analysis, he suggested that tic-downs should have been installed.
IIe stated that this muld luve been crring on the side of safety, even if he later wre proved to be wrong. Tin Board finds this to be a rather cavalier approach to the expenditure of sus-stantial funds which later are reflected in rates, all in tle nane of safety.
Obviously, this plant, like every other plant, has to lu safe.
It.is a priority.
UOntheotherhand,-thereissuchathingasoverbuilding. Based upon all of the evidence, the Board finds it would not have leen prudent or reasonable for Ventent Yankee to have expended the sums necessary for the tie downs until it actually did. The Board notes in this regani the testinony of Dr. Cooper win indicated tlut winn sme -alleviating effects were taken into account as the testing was progressing, the calculated uplift dropped by a factor of over 20.
T. 9-17-76, pp. 75 et seg.
Uith respect to the tir.cly recognition of the problem, the Board finds tlut it was only when Vernunt Yankee was faced with the necessity to take actior,
in tenus of an actual fix, can it be said, in tle circumstances of titis case, that it had a problem. b'hile it always can be argued in retrospect that they should have known, we think the testinony on this point by fir. Swales is 20-20 hindsight. Furtlernere, even if that problem had been recognized earlier, the question remains, how much earlier.
Depending upon the timing of the fix, if the plant lud to undergo an unscheduled outage, the cost s to replace power durirg the outage nuy luve been nore or less than wre actually incurred, depending upca the available sources of power, the Vernent load, and tln length of the outage (which might depend upon the nunpower and unterials available to inplannt the fix).
Finally, whether or not the plant should have been shut down once tic l
problem was recognized is a natter of dispute. 'Ynis Boan) is intimately fantilir r
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with the pressure tint lud built up in late January,1976, regarding the safety and reliability of nucicar power. %e Ven.ont Icgislature had pansed an ik:t the previous year giving it swo exercise of control over future nuclear plants in Vermont. The Nuclear Pegulatory Conn'ission (f00) had been applying pressure to :he Boiling Water Peactors Owners Grotp (RM Owners Group) to finish tleir work on the Slurt-1brm program. A referendum in California on tle future of nuclear Ixuer plants in that state was raising tln enotianal pitch of the delute.
Although it occurred after the shutdown, a special evening session of the Venont Icgislature about Vernont Yankee dramtized the public concern in Venno: t over this issue. Against this backdrop, when tir engineers responsibic for l
safety of the plant and therefore the public safety recor.nund a shutdown at the conclusion of a long series of tests, and an c:: pert as renowned as Dr. Cooper
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testifies lu would Imve recontended that the NIU order a shutdown if Vernont Yankee refused to do so voluntarily, the Boani finds, even in light of subse-q quent events, that Vennont Yankee mnagennnt was reasonable and prudent in accepting that recormendation and shutting down the plant. The Doard finds that.
%le the differential pressure solution was not so clearly understood as suggested i
by Mr. Swales. (See deposition of Mr. Ibenan, pp. 42 et, seq., T., 9-17-76, p. 80.)
Ib attenyt to rely solely on this safety feature while seeking perntission of the NIC to inplenent it periding installation of tiedowns, would.have been unreasonable.
Release of Ceneral Electric Vernont Yankee,has executed releases with Concral Elcetric Car.pany concerning contracts between these two conpanies dealing with nuclear fuel and the nuclear steam supply system supplied to Vernont Yankee by General Electric.
The Public, on the lusis of the admitted dr.icct in tiu suppression containnent system and the expenses associated with renedying tin defect, and on the lusis t
of a deposition taken of Mr. Griffin, President of Venunt Yankee, urge that
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Li mismnagenent le fotuxl in the eFCution of this release. %a full consideration for this release is teing considered in Docket to. 4032.
'ib argue tint tlere i
l was inadeytnte consideration for this release as tin Public does lif attempting to separate the consideration for one release fraa tle rest of the consideration for the settlenent is to ignore that tJr settlanent betwen these corporations involved mny factors and that it is not, at least on the basis of this Ibcord, susceptible of leing broken so neatly apart as L:e Public suggests.
For exanple, there is no evidance tlut Ceneral Electric muld have given Venant Yankee anything unless Ventent Yankte executed Inth releases. Accordingly, on
'he lusis of this Ibcord, the Peanl finds no act of misuvungan2nt in the execution by Vennont Yarikce of tle release relating to the HSSS.
Responsibility of Vernont Distribution Ca panies Dased upon the foregoing, the Poanl finds that it is unnecessary to decide w!rther the circtumtances f this case or any other case would warrant piercing the corporate veil of Venont Yankee or using saiu other legal tirory s
to hold the distribution conpanies accountable for actions of Vonnont Yankee.
Should a different lawsuit arise in the future, the Poanl will decide that case on the particular facts that then airi there my le involved.
Aljustrent Clauses
'1his case would not have arisen tle uay it did had tinre inen no adjustaunt clauses. While the Poani finds no nerit in the utilities' argu:nmt tlut costs fontting the insis for rates clnnjed through these clauses can le set aside only if a carpany is canling an excessive return (on this theory, even spurious costs could be passed through), it believes there is a better l
solution to cover variable yet significant costs being faced by a regulated industry.
In Docket 3758, this Boani announced its intention to cor.puterize costs of service to track how well this Board and the regulated utilities did in forecasting costs.
Such data accunulated on a tinely basis muld allow this
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c Board to nonitor utility operatirns nore effectively and efficiently.
Unfortunately, the programning f or stch an undertaking proved mre difficult than anticipated. Now, the Daard believes it is in a position to do tlnt which it lud previously nuntioned.
It anticipates by next spring, Infore the beginnir g
of the power period beginning May 1,1977, to have such a program inplenented.
Concurrently with inple entation of such a program, the Doard believes it would be advisable to eliminate the use of adjustrent clauses and in lieu thereof, to i
review all conpany costs during a power period, and thereafter nuke any adjust-nunts that might be necessary lefore the start of the next power pericxi.
Since I
companies in Vernent typically buy and sell powr on tle basis of these periods (because of seasonal loads and NEPOOL requirements), this six-nnnth review process will pemit rates to track costs, will provide liore of an incentive to keep costs down and will lerx1 nore stability to tle r.onth to nonth rates.
Concluston Utility capanies are not insurers.
Thus, when there is a defect in a picco of their equipnent, the law does not autonutically make them legally responsible for the costs incurred because of tle defect.
Since ratopayers did not cause the defect, the question arises, why as lutween them and the utility, should they absorb the whole cost?
This answer was given previously and was supported by all the witnesses who spoke to this issue.
It is that utility companies absorb costs when they v
and that ratemvorn absorb costs if tlere is no niisaunager,ent.
are misnunag'ed, f N
w Since the Dcard ins fotrad no niisnunagement, tM ratapayern absorb these costs.
2 3ibc-tynrd is not authorized by law to corpol the utilities to unare.Lu these costs unless they were incurred because of unreasonable c6nduct by the utility.
Such proof was not forthconting in this litigation.
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3 The Board believes that its decision to move from acceptance of j
adjustment clauses to a six-nonth review process, as a nornn1 operating procedtue, will diminish if not eliminate the rate fluctuations covered by tin use of those 1
l clauses to collect extraordinary or significant costs. 'ihe evidence from the public indicated that significant hardships weru caused ly the very quick and l
high rate passed through to them by the clause. On the other hand, there was no evidence that the conpanies (particularly CV and GIP) would be adversely 1
i affected financially if they recovered tlnir costs over a greater length of tinn than they now do through this clause. Generally, significant and extra-ordinary costs are anortized over a reasonable length of tinn and no significant rate fluctuation occurs. The Board believes that this will le the result of its six-month review in additicn to the other nnjor benefits mentioncxl in the discussion of these clauses.
i ORDER IT IS IERGY ORDEIED, ADRJDGED NJD DDCRELD by the Public Service Doard of th'c State of Vermont that:
1.
This investigation is teminated.
2.
Verront Yankee Nuclear Power Corporation shall periodically adviso this Eoard on its prcxjress in collecting any sans owing to it for any costs
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associated with the unscheduled outage of January-February,1976.
Dated at Ibntpelier, Vernont this /S/// ay of (dc/fMO
, 1976.
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