ML19308E198

Rejects 680612 Offer to Participate in Ownership & Operation of Facility,Scheduled for Operation in 1972,due to Lateness of Offer.Interconnection Contract & Territorial Agreement Offer Remains in Effect.Gainesville,Fl 680612 Ltr Encl

ML19308E198
Person / Time
Site:	Crystal River
Issue date:	06/17/1968
From:	Perez A FLORIDA POWER CORP.
To:	Joseph Kelly GAINESVILLE, FL
References
NUDOCS 8003240738
Download: ML19308E198 (4)

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Ju'ne 17, 1968 CN ' O D

i f, & 5 Mr. John Kelly D S A Director of Utilities ,

'-y 'i g()y (- 23 The City of Caincsville Gainesville, Florida

Dear Mr. Kelly:

e RE: Crystal River - Nuclear Facility This is in' response to your letter of June 12, 1968 regarding your offer to participate by way of ownership and operation of the nuclear facility at our Crystal River Plant scheduled for operation in 1972. The installation of this facility has been widely announced at the F.P.C. , A.E.C. , State and local levels for several yecrs.

Your offer is untimely in .tvo respects: First, your' offer to participate in our nuclear project is late since the project is beyond the point of =odification and, second, your concern for an additional power source from us has no foundation since we are not electrically interconnected.

As you are fully cognizant, system reliability in the electric utility induatty today requires a minimum of seven years' advance plan-ning for a large unit to becoma operational. Accordingly, our nuclear facility was planned in 1965, and contracts and A.E.C. license applica-ti,ons were made in 1957 in order th t the unit would becomo operational

, in 1972 to =ect our projected system load growth and caintain system reliability. Since our respective sys cms were not cicetrically inter-connected in 1955, nor are they at this time, the City of Gainesville's

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electric power supp'.y probic=s vere not contemplated in determining the size or location of ;..a nuclear facility. As a matter of fact, early comnitments for a second nuclear unit were abandoned and our application to the A.E.C. for licensing of the second nuclecr unit at Crystal River uns wi:hd:cun since our projected load could not justify that unit. The entire output of our nuclocr unit is required for our projected system load growth. A revision in plans to accommodate your offer-at this late date would jeopardize our sys:cm integrity in 1972. Furthermore, we are not cuare of the Icsal authority under Florida law for a city to participate with free enterprise in a non-governmental endeavor.

The interest you evidence in Florida Power Corporation for an EXHI3IT "A" (Page 1 of 4) 8003 24c Q3[

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Mr. ' John Kelly .

June 17, 1968 Page 2 additional source of power is simply impractical since our respective sys-tems are not electrically interconnected. This matter is now pending before.

the Federal Power Commission in Docket No. E-7257, which you instituted in November, 1965. Final adjudication of this proceeding is indeterminable.

It would appear that your power supply problems can be met satisfactorily by the acceptance of the territorial agreement and the Contract for-Inter-connection and Electric Service we proffered in the Federal Power Commis-sion case and of which, as of this writing, you hhve not availed yourself despit'e the fact the Federal Power Commission Hearing Examiner called for such an arrangement in his decision of January 17, 1968.

As you know, the territorial and interconnection arrangement we prof fered in the Federal Power Commission proceeding provides for mutual exchanges of capacity and energy, both short and long term, at rates (subject to Federal Power Commission jurisdiction) that take the total-costs of each of our systems into_ account in order to assure both the purchaser and the seller of his proportionate share of the econcmies of scale and thereby guarantee that the other customers of our respective systems will not be discriminated against, as required under the Federal Power Act and the fundamental and elementary rules of equity and fair play.

To reiterate, for all of the reasons outlined above, the sugges-tion in your letter of June 12, 1968 is unacceptabic, untimely and infeas-ibic. However, please let me assure you our offer of an Interconnection

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Contract and territorial agreement as submitted in the Fcderal Power Com--

mission proceeding remains open as of this da'te and, if you would like to reconsider, we would be happy to meet and discuss the matter at a time and place convenient to you.

Very truly yours,

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A. P. Perez President and Chief Executive Officer APP /dv I

EXHIBIT "A" (Page 2 of 4) j l

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Florida Power Corporation g> p 9 Florida Power Corporation Building ,

Q, S t. Petersburg, Florida 33733 ,. /

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Dear Mr. Perez:

d I have noticed recently in the press that you contemplate building a nuclear plant at Crystal River. It is my understanding thathearings are now sched'uled there on July 16th. We are very much interested in this project - interested to the point of the City of Gainesville participating with Florida Power Corporation in its proposed nuclear generator at this location.

It now appears that the litigation between Gainesville and Florida Power may be drawing to a close, and, in any event, the feasibility and desirability of an interconriection between the systems is well established as to power supply matte r s .

We would like to consider the purchase of a block of power from'a large, economic nuc1 car generator on the basis of Gainesville supplying capital equivalent to the investment cost of an agreed-upon level of kw capacity. When the plant becomes operative, Gainesville would be amenable to sharing on some agreed basis the following expense s,: ope rating, maintenance, fuel, administrative and general, and taxes other than income taxes related to the value of the facility.

Florila Power would operate the plant, and Gainesville would be entitled tc its pro rata share of the capacity when the plant is operating. Gainesville would be consulted on the maintenance scheduling of the plant. Gainesville's share of the capacity would, in effect, be considered similar to a generating unit of the same size operating on Gainesville's system. Gainesville would pay an appropriate charge for the transmission of the energy to its system.

Consideration would be given as to whether Gainesville's capital contribndon should be in the form of a prepayment for capacity and energy or some type of joint tenancy.

EX111 BIT "A"

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.g Mr. A. P. i Pe re z June 12,1968 '

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It is believed that an arrangement along these lines would be profitable for both parties. It could be.a major first step in coordination of power supply between our systems. Gainesville's representatives will be happy to meet with you at a time and place'which suits your convenience.

i Yours very truly,

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John R. Kelly

[ Director of Utilities JRK/skw ~

cc: Mayor / Commissioner Mr. ' Ge orge Spiegel Mr. R. E. Roundtree i

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EXHIBIT ','A" (Page'4 of 4) 5