ML19309D017

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Transcript of PA Public Util Commission 800227 Hearing in Harrisburg,Pa.Pp 2,494-2,527A
ML19309D017
Person / Time
Site: Three Mile Island Constellation icon.png
Issue date: 04/03/1980
From: Russell S, Seltzer A, Shanaman S
PENNSYLVANIA, COMMONWEALTH OF, RYAN, RUSSELL & MCCONAGHY
To:
Shared Package
ML16341C651 List:
References
NUDOCS 8004090479
Download: ML19309D017 (37)


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TEE PENHSYLVANIA PUBLIC UTILITY COMMISSION $

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5 In re: I-79040308 - Pennsylvania Public Utility g Commission versus Metropolitan Edison Company, et al.

7 Further bearing.

8 9

10 Harrisburg, Pennsylvania 11 February 27, 1980

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1 14 Pa'ges 2494 to 2527A 15 x

16 17 18 19 MOHRBACH & MARSHAL, INC.

27 North Lockwillow Avenue .

20 Harrisburg, Pennsylvania G '

17112 21 22 l 23 c

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?- 1{ Defore hs 2

THE PENUSYLVANIA PUELIC UTILITY CO2DIISSION i 1

3, In re: I-79040308 - Pennsylvania Public Utility 4 l Commission ver, sus Metropolitan Edison Company, j et al. I 5l 6'

Stenographic report of hearing held in 7 nearing Room No. 1, North office anilding, Harrisburg, Pennsylvania, l Wednesday, 9 February 27, 1980, l at 1:00 o'= lock, p.m. I 10, I l

11 -

EEFOP3 12 .

SUSAN SEANAMAN, CHAIRMAN, Presiding

- 13 MICHAEL JOHNSON, Commissioner LINDA C. TALIAFERRO, Commissioner 14 UAMES H. CAWLEY, Commis=ioner M ---

16 APPEARANCES:

17- ~ ~~

SAMUEL B. RUSSELL, ESQ., and 18 ALAN M. SELTZER, ESQ.

Ryan, Russell & McConaghey 19' 530 Penn Square Center P.O. Box 699 ^

20 Reading,. Pennsylvania 19603

For - Metropolitan Edison Company and 21 Pennsylvania Electric Company 22 I

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2495 l

~ ' l 1# APPEARANCES (Continued):

2: .

DAVID :1. BARASCE, ESO.

3! l l'4 25 Strawber..y Square Harrisburg, Pennsylvania 17127 4j For - Office of consumer Advocate z \

i JOSEPH J. MALATESTA, ESQ., and 6 .; ALBERT JOHNSON, ESQ.

! l

{ G-38 North Office Building 7 P.O. Box 3265 Earrisburg, Pennsylvania 17120 8, For - Commission Trial Staff

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BERNARD A. RYAN, JR., ESQ.  !

10l: Dechert, Price & Rhoads l 800 North Third Street i 11 Earrisburg, Pennsylvania j For - Bethlehem Steel Co.poration I L

d. -

JOHN BOWERS, ESQ. O i R.D. 97, Box 388 i 14 York, Pennsylvania 17402 2 For - Holly Keck, Deep Run Farm, Inc.

15 ,

I 16I KENNETH A. WISE, ESQ. ~

218A North Front Street 17 Harrisburg, Pennsylvania 17101 -

For - Louise Riley, S.P.A.G.

18 - ..

19 LOUISE DUFOUR . _

Route 401 20 chester Springs, Pennsylvania 19425\

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2496 i

1 j APPEARANCES (Continued)=

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2l f 3 DAVID A.-FAZZONE, E$Q. ,

Sullivan & Worcester i 4 100 Pederal Street Boston, Massachusetts 02110 5 Por - Theodore narry a Associates 6 .. ..

DENNIS E. SHILOBOB, ESQ.

7 Por - Johnstown Area Regional Industries, Inc.,

Johnstown Arec Economic Development 8 Corporation, Johnstown Industrial Park, Inc.

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  • i. ij INDEX )

2[ WITNESSES Direct Croca ReDr RSCr  !

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,1 5, Robert C. Arnold, l

Re s ume d ------------ ----

2 510 ---- --- 3' fl ,

b 3! ,

6i' MET-ED/PENELEC EXHIBITS IDENTIFIED

?j A-73 Four-page document, response to Com-t

. mission Trial Staff Interrogatory 8l Nos. 3 0 and 31 ------------------- 2507 9 A-75 Two-page document, Response to Com-mission Trial Staff Informal Data 10 Re qu e s t ------------------------ 2507 11 A-76 One-page document, Response to Com-mission Trial Staff Informal Data 12 Re qu e s t --------------------------- 2508 C

13; A-77 Two-page document, Responne to Com- O mission Trial Staff Informal Data 14i Reque s t ~ ~- ---------------------- 2508 15 A-78 one-page document, Update of Table 3 of Appendix B attached to Meted ifj Petition, through January 1980 ---- 2508 ,

1 17 ! A-79 One-page document, Update of Table 6 i- of Appendix B Attached to Meted ggi -

Petition, through January 19 60 ---* 2508 19 A-80 One-page document, Update of Table 7 of Appendix B Attached to Meted l

10 Petition, through January 1980 ----- 2508 j 2;,A-83 One-page document, Response to Three Mile Island Alert Interrogatory No.

22 11 --- --

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INDEX - CONTINUED

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t 2! MET-ED/PENELEC EXHIBITS IDEMTIFIEC k J

3! J-13 Four-page document, Response to  !

clarify the record at H.T. 2404

'f with respect to comparative utility bills ------------- - - - - - ----- 2508 M-3 Six-page document, prepared by 6 Merrill Lynch Pierce Fenner &

smith, Inc., Securities Research 7 Division, entitled "A service ror g

Institutions," April 1979 ---

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1 i THE CHAIRMAN: We will tahs'up a couple 3l'

[ of procedural matters. I think I left at the end of 5 the last hearing all the parties with a request to try 6 to schedule their witnesses for the upcoming hearings.

7 Can I ask now if any of the parties can give us some 8 sort of information as to when their witnesses might 9.j'be prepared?

i 10) 3 Let's start with Mr. Malatesta.

11ii MR. !!ALATESTA: We should be able to go II,' the week after March 4, after the testimony is filed.

13 THE CHAIRHAN: Okay. So you vill be O

14 prepared for March 11 and 127  !

15 MR. MALATESTA: Yes.

16 THE CHAIRMAN: Mr. Barasch.

17 Im. BARASCH: I think the question goes a

is to when the witness will be able to testify.

19: THE CHAIRMAN: Right.

2d: MR. BARASCH: The best time for us would l 21'I he any of those days, tha 24th, 25th, and'26th.

I n THE CHAIRMAN: Okay.  !

1 23h Would you identify yourself, pleasa? i l l

s MR. FAzzona: I.would, Madam Chairman. i t

25'[ My name is David A. Fazzone.

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I I am with Sullivan &

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i 4 l' Wercester and together with Paul E. Russell represent i 2 Theodore Barry & Associates in thic proceeding. And ,

3 l we would be available on the 18th cnd 19th to testify. '

4 Mr. Russell has advised me of some 5 conflicts that he has with other cases pending before 6

the Commission elsewhere on other dates. Those two 7 days would be satisfactory to us.

O MR. RUSSELL: If the Commission please, t

9 would Mr. Fa= zone's group include the Barry witnesses f 10 as well as Mr. Dewey?

11 MR. FAZZONE: ~

That is correct.

12 THE CHAIRMAN: Mr. Bowers.

13 MR. BOWERS: Our witness Ar >=sically 14' prepared to offer her testimony at any time convanient 15 to the Commission. The only data that hasn't been 16' mentioned so far is March 17. That is fine with us.

17! COMMISEIONER JOHNSON: Y)u realize that

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18 is St. Patrick's Day?

I 19 Mn. BOWERS: I understarid, 20! THE CHAIRMAN: Ife will 4.11 wear green!

21 I don't see any of the others.

22 MR. RYAN: Madam Chairr,!Ln, we will have

" 23.si one witness for Bethlehem Steel and I would anticipets 24 his testimony would be quite bria5 and he will be l 25 available at any date you pick.

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THE CHAIPRAM: Are there any other  !

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2f parties in the audience not at counsel tablo? I guess i I .

3' we will have .o valt to ask them. I  !

! l Miss Dufour, are you planning on present-!

4! '

s 5! ing any witnesses?

I And, if so, what dates would they 6 be available?

7 Ms. DUFOUR: we are not planning on -

3 presenting a formal witness. One of our me= bars will 9 probably submit our general testimony to substantiate lo i some of the things Mr. Johnson asked me to earlier 11 in the proceedings, but it will be done wherever 12{

possible. .

t .

13 I THE CEAIRMAN: Mr. Russell, do you have I

14! any comments as to the potential conflict referred to 15j by Mr. Fazzone? .

l 16 MR. SAMUEL RUSSELL: I think it was a 17; Paul Russell to whom he was referring, i

ig, MR. FAZZONE: Faul Russell is my co-i Ipi t

counsel. -

20, t

THE CHAIRMAN: Okay. I misunderstood.

f f 21i Now I also believs in the audience we have Mr. Shilobob.

33 MR. SIIILOBOB : Yes. Madam Chaint.an, 3 Commissioners, my name is Dennis U. Shilobob. I am 25j here in representation of the Johnstown Area Regional

- _ _ _ - - . - -:,-~.--

2501 i

l b 1 f'- 1; Industries, Inc.r Johnstown Area Economic Development

/ 1 f i 2 l Corporation, and Johnstown Development Corporation, andj 3rl Johnstown Industrial Park,.Inc.

4*

t We have filed this morning with the 5 Commission a petition to intervene in these proceedings.

6 All of the parties that I represent are Penalec 7 customers. Unless the Commission would like me to, I S{ won't go through the detail of the petition encept to l

l 9 ' point out just a few items.

10 The basis of this petition arises out of 11 testimony that was presented for the first time on i 12 approximately January 17, 1980. Prior to that time b 13 we had no knowledge of the information concerning the 1

14 ' Potential reorganization of management that would have 15 justified our entering or intervening in these 16- proceodings prior to that date, so I would like to 17 point that out to the Commission in view of the late-o yg ness in these hearings in which we are presenting our 19 petition to intervene. ~

20 What became evident with that testimony 21 is the Metropolitan Edison Company, in response to 2 the concerns of this Public Utility Commission, has 33 put forth a proposal where they are now going to render I

ss 74 part-time management to Metropolitan Edison Company te j ;p solve the concerns of this commission. They have j :somucx e masu me. - e x. :.oe::vemw .w= - uanarsavna, em vma

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. 1 1 indicated they are going to set up a ssparate manage-  !.

2 ment entity to manags both Ponelec and Metropolitan 3;f Edison.

4 t I 4 If they are going to do that, then l 1

5 necessarily they aren't dedicating their full time 6 to both companies and this is of a treme concern to 7' all of the parties in the Johnstown area r particularly 6 those responsible for the encouragement of the indus-9' trial development of the area.

10 THE CHAIRMAN: Mr. Shilobob, have you 11 served your petition on the other parties of record?

12 MR. SHILOBOB: I have served my petition 13 on the parties present here today. I have not served 14 my petition on the others. The petition was signed,

. 15 the affidavits were signed late yesterday afternoon.

16,' THE CHAIRMAN: For what purpose are you 17' vaquesting intervention? In other words, do you intend 18, to put on witnesses? .

I I

19 MR. SHILOBOB: At this present time we 20 don't have a contemplation that vould be needed.

21 We are interested primarily in drawing to the attention of this Commission the extreme problems of these 22l ,

23 affiliated interests that are combining their opera-2.;. c tions with a potential conflict of interest and the 25 potential. danger of requiring the customers in the monnar.ex a :stacxu rne.- ::r n. s.o=v::.:.=w xtr. - namca ana. m. m ia m

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2503

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Penalec area to subsidisc some ed the problems of I

~l 2l Meted and we would like to be represented for that

  • 3 I

3 purpose. I L

4 THE CEAIRMAN: Commissioner Johnson. I 5 COMMISSIONER JOHNSON: Mr. Shilobob, can 6 you do so while keeping the scope of your inquiry l

? within the limitations of that material which is 8 already on the record?

O MR. SHILOLOB: Commissioner Johnson, 10 honestly, I have not reviewed the entire record, but

! 11- I believe the answer is yes, and the reason is because -

12 we.want to focus on the issue of this management G 13 restructuring and the potential conflict of interest i

and not any of the other issues, so I believe in 14f.

15 [

i direct response to your question, with the e=ception 16 of possible need for cross-eramination of Mr. DeKamp 17 and Mr. Kuhns, which wouldn't be very substantial,

  • gg i I believe that we could make our point to the

.19 Commission.

20 The Public Utility Code makes it l

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21' necessary that this commission be particularly careful 3 22 when you are dealing with affilicted interacts and I l

33 think that has particular bearing in this casa, probably, s-25

, more than any other two utilities in this State, and 25 the potential danger is that there could be unfair mannuen a au.asnu. me. - e u. a.oc :wr :.ew an - uanmesone. n. mia i

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Ir treatment, the greatest on ths Penelac cus omers anc 1.

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2l not those of Metrd, and we uant to also avoid the 1

3- Public Utility commission assisting GPU in accomplish-4 ing that which it could not de legally, namely a 3 merger. If in fact they are going to conduct a merger, 6 whenever they can't do it as a matter of law,.I think '

7 it would be improper fer this Commission to do it. So O 8 it is on those very limited issues that we request ,

9 leave to intervene.

10 I would like to point out this final 11 one last thing without going into the contents of our 12 petition, that in Paragraph 8 of tiis petition, I )

13 [- believe it is--it is Paragraph 6 of the petition, we i

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14 indicate a belief that this proposed management team 13 that would manage both Penelec and Meted would be a j 15 corporation.

17 It.is not clear from the record whether 18, it would or would not be. Whether it is or not would I

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19 not in any way take away from the validity of our 20j arguments.

21 Madam commissioner, unless tihere is any 23l request that I go through the apeifics of our i' i

23l petition to intarvene, I wouldn't say anything 1 '

34[ further.

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h 23,k THE CHAIRMAN: '

Thank you, Mr. Shilobob.

l BEcH2EACM & *4A3SKA7 INC -17 N. L3TC7.T.,1cVF AY:l*. - M.untSit**Itc. PA.17112

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Eo any of the parties at this tir.e have  !

I 2 any comments in the nature of objectione or otherwise 3l to the intervention as e::ple.ined by Mr. Shilobob?

4 Mr. Russell. b 3' MR. SAMUEL RUSSELL: I was just given a 6l copy of the petition by Mr. Shilobob before the 7 hearing. I haven't had a chance to read it, so :

8 couldn't give you a direct response at the moment.

9 We could in the morning.

10 THE CHAIRMAN: Mr. Malatesta. i ,

11 l. l MR. MALATESTA: Without giving a detailed "

l 12 response, the interest expressed by Mr. Shilobob in C 13 his petition appears to be directed at matters not i 14' at issue in these proceedings.

35 No one has requested the commission to 16 ratify the proposed merger of management decisions 17 of Meted and Penelec, so it really is not an interest 1

13 here. So I don't think an appropriate interest is

! 19 stated. '

l 20 MR. SHILOBOB: ' May I respond, Madam commissioner?

21 t 22 THE CHAIRMAN: Let a go through the 23ijparties.

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14 l lir. Sarasch, do you have any comment 8 l

I 25q! at this time?

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,- 1, MR. 3ARASCH: Uc. have no comment at this 3i time.

?

I' 3- THE CHAIRMAN: Mr. Fazzone?

  • I 4 MR. FAZZONE: No, Madam Chair =an.

3 THE CHAIRMAU: Mr. Bowers?

6 MR. BOWERS: No comment.

7 THE CHAIRMAN: Miss Dufour?

8' MS. DUFOUR: No.

9 THE CHAIRMAN: Mr. Ryan?

MR..R'JAN: No comment.

10[

11, THE CHAIRMAN: Mr. Shilobob, do you have i

13 a comment you want to make?

MR. SHILOBOB:

13 With respect to the 14 issue of whether or not it has relevancy in these proceedings, I would point out at Page 1116 of the 15 16 j. tastimony the GPU witness specifically indicated that

7 the testimony on the reorganization is in response to

. 7gl this Commission's concern.

l 19, More important, the issue is whether or s

n t management is competent to run this company and if 20 f..

37; their responso, to show you that they have competence i

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to run this campany, if their response is that they

.e. a . are going to give you. lass management. then I subnit I

gl this is extremely relevant and goes to the heart of

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g the issue.

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1f TEC CEAIRMAN: Thank you, Mr. Shilobob. f

2 I would indicate, one, that I would b

3 request t' hat you serve all parties with a copy of i.

4i your petition and we will give all of the parties 5 ,

until March 5 in which to file any written comments l

6 to the request or the petition to intervene.

7 Is a representative of the Lehigh Pocono 5 Committee of Concern here?  ?

I 9 (There was no response.) 1 i

10 THE CHAIRMAN: I believe that concludes 11 our procedural matters.

12 Mr. Russell, are you prepared to 13 proceed?.

14 MR. S. RUSSELL: Yes, Madam Chairman.

15 We have handed to the Reporter three copies of various 16 documents which we ask to have marked for identifica-17 tien as Meted /Penelec Exhibit A-73, A-75 through A-80 gg inclusive,.and A-83, 3-13 and M-3.

19 (Four-page document, Response to l 20 Commission Trial Staff Interrogatory No's. 30 and 31, 21' was marked for identification as Meted /Penelec Exhibit g i Nc. A-73; 23 Two-page document, Response to Commission v

3p Trial Staff Informal Data Request, tt.s marked for 25 identification as Meted /Penelec Exhibit No. A-75; nexamen :, unisnA:. : ae. - a n. z.ce::wn.2.:nr as - manmssuno, m. :ma i

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. _ _ _ _ . - . . _ . . . .1_.___.-.

250G c- one-page document, Response to j 1[ l 3' Commission Trial Staff Informal Data Requect, was 1 i

3' marked for identification as Meted /Penelec Exhibit j t

4 No. A-76; I 5 .

Two-page document, Response to 6 Commission Trial Staff Informal Data Request, was 7 marked for identification as Meted /Penelec Exhibit

8. No. A-77; 9 One-page document, Update of Table 3 of j 10 Appendix a Attached to Meted Petition, through Janusry i l

?

11 1980, was marked for identification as Meted /Penelec ~

12 Exhibit No. A-78; 13 One-page document, Update of Table 6 of 14 Appendix 3 Attached to Meted Petition, through -

- 15 January 1980, was marked for identification as Meted /

16 Penelec Exhibit No. A-79; 17 One-page document, Up. ate of Table 7 of yg{ Appendix B Attached to Meted Petition, through January 1

19' 1980, was marked for identification as Meted /Penelec g Exhibit No. A-80; ~

One-page document, 'esponse to Three Mile R

21l;.

Island Alert Interrogatory No. 11, was marked for identification as Meted /Penelec Exhibit No. A-03; Four-page document, Response to clarify

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.,  : the record at U.T. 2404'with respect to comparative '

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1E utility bills, uns marked for identificatica as Met.,d/ 't I i 2 j. Penelec Exhibit No. J-13; I 3f, Six-page document, prepared by Merrill l

4 Lynch Pierce Fenner & Smith, Inc., Securities Research 5 Division, entitled "A Service For Institutions," April i I

6 1979, was marked for identification as metes /Penelec 7 Exhibit No. E-3.)

S MR. S. RUSSELL: Respondents at this i

9 .

time recall Mr. R. C. Arnold, who is available for 10 further cross-examination.

11 ___

11 ... ROBERT C. ARNOLD, having be!An 13 previously sworn as a witness, was resumed if and testified further as follows ...

15 THE CHAIRMAN:

Mr. Malatesta, do you 16 have-any further cross-examination of Mr. Arnold?

17 11R. MALATESTA: No, I do not.

18 THE CHAIRMAN: Mr. Barasch? .

19 MR. BARASCH: Not at this monsut, Madam 20 Chairman. g 1. .- -

21 / THE CEAIRMAN: Mr. Bot +ers?

23 MR. BOWERS: Yes, ma'am.

I

! 7'.2 24 25 MOSUt3/.CH 3 MAftMLW 2:C.*= 2ll' 2L LCC2Ghv/ AVE.- EUJut'Cl2cnG. PA 27312 i

T. : --- ___.

Arnold - cross 2310 fj  ;

a i i n 1: .

C20 S S-27.A*41NATIO.N -

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! CONTINUZD i -

31 l e

3l BY MR. SOWERS: f i

4 3 Good afternoon,2ir. Arncid.  ;

I 3l ,

A Good af ternoon, Iir. Bowers.

l 6' G Mr. Arnold, would it be possible for you to brin I

?I us up to date as to the latest development in the I 8 proceedings brought against your company by the Nuclear I

9! ' Regulatory Commission? .

10 A I presume you are referring to the enforcement '

11.- proceeding as represented by the HUREG 0600?

3 0 Yes. I j 13 A We forrarded to the Huclear Regulatory Commission 14 a check for $155,000 approximately two weeks ago--I 15l don't remember the exact date--in payment of the g 16 assessed penalty, indicating in our letter that we had l l l 17 made arrangements for a meeting with the Region 1 18 personnel to discuss various aspects of the most 4

19l recent NRC letter as far as what would be needed in i

20,; the way of additional information and what would be i.

21
necessary for satisfying the NEC that we had

! l 22' instituted sufficient corrective action in response te ,

j l

23! the deficiencies that,they identified in the : curse.  ! l i  ! .s i 2d. of their investigation. ld 15 G Would you explain the reasons uhy that action f

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Arnold - cross 2511 N t 1b was taken by your company? l

.?

2 ,A Yes. The altarnative to the company to paying j S ' the penalty at this time was to request a public i

4 -

hearing. Our judgment was that the effort involved in 5 a public hearing at this time, the arpense invo2ved, .

6 and the likelihood that that would result in any 7 significant mitigation of the penalties was such that '

8 the most prudsnt thing to do was to try to move forward 0

from this point, remit the assessed penalty, and trf-10 i to get all cf the issues settled as expeditiously as l 11 we could with regard to additional action on our part g.,. 12 to put into place those actions, those corrective Q~ .

12 actions that were called for.. - -

~

14 To a great extent, many of the outstand- i 8

15 ing issues were no longer appropriate to the circum-

16. stances that exist now, so that I think that it is i

17 going to be more productive on the part of everyone 18: to sit down and discuss what the NRC's concerns would 19 be with where we are currently vis-a-vis the deficien-l

20. cie~s that were identified so that we can be most 21 efficient in addressing the concorns as they would l

22 exist for the present situation.  !

l 25 That was the reason for requesting a

" l s

v 24 meeting with the Region 1 staff to discuss those issues l l

25 instead of attempting to resolve them all in $

i nexas4.-w a r.4xw.r tre. -::7 n. :.ecxw:mw av=.- nanmenvas. .'4. 27 sin - ,

Arnc1d - cresc 2512 1 letter-writing.

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1 2! '

0 so would it be fair for me to =haracteri=e the  ;

I 3 present situation as one in which the question as to  !

.f ' wheth3r or not the deficiencies indicated by the NRC 3; in NUREG 0600 and subsequent commissions to your 6 company actually' existed at the time of the accident 7 is a closed one and that the only issues remaining 8 to be danit with between your company and the NRC 9liconcern futura actions on the part of your company to 10! correct those deficiencies?

I 11I L I don't think I would characterine it that way 12 from two standpoints.

33 First of all, I don't think there was ever a O

14, forum in which all of the items identified in NUREG l

15l 0G00 as potential deficiencies were addressed except I

id{ that that occurred within the NRC and I think we _

i 171 would have to presume that the NRC's judgment was that "

IS !I many of the items identified in NUREG 0500 as potential 1l items of noncompliance were in fact not items of I

20j noncompliance or at least were not of enough signifi-31 cance, even if they judged them to be items of non-32!1 compliance that they desired to take any enforcement

?3 Iaction.

24i So that I understand the enforcement letter to V L

25 be their summary or their statement of the itams of l

-- mm=. =: _ =, ::. wm _:.:= m. - me== u. mm l w m- m- om me ma ~

Arncid - croco 2513 i:

. D \

, - , 1 nor. compliance that verc actually identified by them  !

e i ,

.1jj to come out of the investigation that rssulted in j t

U Sfl the report that was entitled MUREG 0600. j l

4: I think the second aspect is that there i 3

5 are still some additional items that we contested which 6 were not modified by the NRC in their findings on 7 those, that we think that the judgment of the NRC is G in error or their knowledge of the factual matter is 1

i 98 in error, but we did not feel that there would be 10 iany benefit in exploring that or in pursuing that t

11l through hearings, il It could be done just as well through identify-C U 13' ing the corrective action that would be necessary to 14 satisfy the NRC, independent of whether or nct the 15' deficiency was in fact there at the time of the 16 '. accident, but tha current circumstances are sauis-17 factory.

18 G From a procedural standpoint at least,,the .

.T items of noncompliance in NUREG 0600 as modified by 20 the october 25 notice of viciation letter and the

! 21, January 23--I believe my statement is correct--order l

l 32 responding to your answer to the notice of violation, 3 from a procedaral standpoint, there would be no further r

.u. , review of the NRC's action.

25 Would I be correct in my understanding? Is that msxans.= e a u.utar.m in-er x.:.eexw;u.ori.vr.-xarucaux= n. tr21:

~ - .- --

5 w --

nu , n. ~ ~ .

3. .. . .r,.r;

_y Arnold - cross 2514 9,  :  !

i 1 not the result of the e.ction your company has taken?

I ,'!

Aj 1 That is my unf.erstanding of the result, yes.

)()

3 G With regard :o the hearings that are presently 4' under way with ragt.rd to the restart of TMI-1, vould 5' you give us your latest understanding as to the status 6i of those hearings?

7 L ny understanding is that at the latest pre-6 hearing conference schedules were proposed for commence-9 ment of the' hearings and of the major intermediate '

10' steps. I think the most significant ene was the 11 forecast by the NRC that the safety evaluation report 12 would not be available until April 15 and based on U' that projected date they recommended to the Atomic 14 Safety and Lice'nsing Board that there be a series 13 of other procedural events, that we be given an 16 .

opportunity which I could reconstruct with some I 17 l assistance, if it is necessary, but basically laid out  ;

l 18 3 a schedule which led to a recommendation on their part i

1.0 for the commencement of hearings on August 31, 20 The company presented a schedule, proposed 21' schedule, that also was based on the April 15 issuance 22-of the SER for commencement of hearings on June 15.

i I 23 d 4 Easycurcompanydevelopedanestimateastothel N-24 most likely date of TMI-1 restart relatad to either ')

i 25:i one or both cf those time frames those timetables? l

en::su::t e ut.asr.r,z. -tc. - er r t.cc::w::Acw m=.- ra.x:t:su .c. .'t. 2: t ts '

mm

Arnc1d - crocs 2S15 0

lI  !

r.  : .i A I"c have not. .i 1:t  ;

2 y D. What delay from the initici schedule set out V l

. Si by the NRC in its August 9 order dc. those tuo, either c:ie 1 l' I 4; or both of those two time frames, represent?

I 5} L commencement of the hearings on June 15 would 6'Ibe approximately four. months later than the schedule i

7 that war attached to the August 9 order which showed i S' a start of hearings 180 days after the publication of the notics.

10 The August 31 date would be approximately siz 11 and a half months delay.

7 12 MR. BOWERSr Thank you, Mr. Arnold.

13 I have no further questions of Mr. Arnold, but I 14 would like to make an application at an appropriate 15 time, either now or at the conclusion of Mr. Arnold's l

1 16[ crose-examination.

17 THE CHAIRMAN: You want to make an I -

. IS ;' application? . . _

t i

19, MR. BOWERS: Yes. ..

20[ THE CHAIRMAN: I don't understand. What

21. do you mean by " application"?

3 MR. BOWERS: I have a request for action 23 l- by this Commission, on the basis of Mr. Arnold's

\,

2y testimony which he has just given.

25 THE CHAIRMAN: Miss Dufour, do you have i

C*Ct:AC:f .0 T2AR37:AL. !::=. 27 tL I.OC30**::.2.2W AVE. - f!Aar.!c5UI18. .% '7112. '

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Arnold - cross -

2516 if .

r 1 ip crcas-examination?

N l 3 !) ;.

MS. DUFOUR:  ??s.  !

l 0l 'THE C3AIMU.N: . After we are cencluded j I I t

4  :. with the cross-examination.

]

5laYus.DUroua:

I 0 4 Mr. Ar=cid, is the 5153,000 fine we have been 7 discussing something that is going to be charged to O the ratepayers?

9[ A. Well, I am not an accounting witness. It is 10 my understanding that penalty payments such as this 11 are not permitted to be included in the rate base 12 but should beborne by stockholders.

13 g can you tell me the cost estimate of the sub-14 merged demineraliser system for the highly radioactive <

15 water?

16: 3. I woull like to I guess qualify my answer by {

j c ,

17! saying that I have not had the opportunity recently I .

18 to review the cost estimate for that system, but my 19 expectation is that the system when insta11ad would 20 probably be on the order of six to eight million 21- dollars.

1 e

22li 0 And it is true that you have already begun L

23[ installing it, is it not? I p

I No, we have undertaken design and fabrication.

34f!A. )

7,5ij We anticipate the initial pieces Of equipment will h.

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Arnold - cross . -2517 I

  • s

~-

1? be delivered to the sita in April. j 4

f 3 .' G So a newspaper account that I have seen that i f 5 $8 million has already been invested is incorrect on 1

-r the SDS system?

l 3 L That is incorrect.

  • 6 0 It is true that the system has to receive NRC 7- approval before it can go into operation, is it not?

6' L That is correct.

9 0 And when do you expect to receive that approval?

10 L I would anticipate we will go through the same 11 process we did with the EPICOR 2 system which is for ~

12

' the NRC not to grant approval for operation until we C' 13 had not only completed the installation and check-14 out of equipment, but also completed the preparation

~

15 of al1 procedures and the training of operators, and 16 examination of operators by the NRC staff.

17 So I would anticipate that that is probably 18 late summer, early fall, time pehiod. -

19 g There is a possibility, then, that the NRC might 20 not allow the SDS system to go into operation, isn't 21 there? ,

22 L Yes, ma'am.

23 S And if for some reason they should decide not r

m. 24 to let it operate, do you know who will be charged 25 for the investment that will already have been madNi?

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  • Arnold - cross 2512

!l i

[ 1 1 A No, ma'am. j 2, 4 one last question in respect of the recan-e l

3 leakage of radioactive gas. Are you familiar with the  ;

4 suggestion of a local area resident that a certain 5 chemical could be placed in the air so that residents 6 of the area would have more immediate netification that' 7 there was a release going on than the monitoring 8 systems which have not proven to be as reliable as 9 some of the residents would like? Are you familia:

10 with that?

11 A No, ma'am, I am not.

12 MS. DUFOUR: Thank you.

13 THE CHAIRMAN: Mr. Wise?

14' MR. WISE: No questions.

I 15 THE CEAIRMAN: Mr. Barasch? 8 16 MR. BARASCH: Thank you, Madam 17l Chairman. I just have a few questions.

3 ig 3Y MR. BARASCH:

19 0 First of all, did I understand your answer to i

i 20f Mr. Bcwers' cross that you now indicate you expect a 37; four to six-month slippage in tha decision date in the ,

! l 22! C.C pr ceedings on the restart of TMI-1?

4

r. A I don't think that I hava generated an j i

g, expectation on that inasmuch as I indicated to Mr. ,)

I 25j aowers that we had not worked up the latest estimate I

weaman a amm. ma--o =. swm.:.aw.a=.-rammma. n..m:x l

Arnold - crosa 2519 i,t ,

e 1[ of the earlisat or erpected restart date for 7 nit 1 b I 2 ibased upon those tuo datos for commencenent of 3 hearing.

4 C Well, the most recent decisions by the NRC 5 regarding the restart proceedings, would you say that 6 vill result in or likely result in slippage.past the 7 August date that you indicated?

O MR. S. RUSSELL: Are you talking about 9 the final decision of the NRC or the start of the i

10jhearings?

I 11 ] 2m. BARASCH: I am talking about the 12 final decision itself. -

13 TEE WITNESS: I am sorry, then I don't 14 understand tha questi n , Mr. Barasch. Would you ask 15, it again? -

16 BY MR. BARASCH:

17 a As I understand it, the NRC has recently 13 [ delayed the start of the hearings on the restart .

1.0 proceeding for seven months; is that correct?

10 A No, sir, it is not. The hearing schedule is 21.. set by the Atomic Safety and Licensing Board and not

( 22 .

the Nuclear Regulatory Commission staff. That I 23, identified :o Mr. Ecwsrs was at the most recent pre- '

s 2;;l hearing conferences the NRC staff proposed a schedule i

25 ':

kwhichwouldhavehearingscommenceonAugust31.

- _ _m_=, . m,._: m__ -, . m m:

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- 8

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. G. _ '..

, _ ,  ; 7 Arnold - cross 2520 i

l

' i <

I  !

1 C I wondar if tomorrow ths URC would give you

)

2 permission to restart TMI Unit No. 1, is the plant i i

3 in operational status that would permit its restart 4 tomorrow?

5 A No, sir. As I have identified in previous 6 testimony, we are working to a target date for comple-7 tion of those items required for restart on the 1st 8 of June and the current schedule for delivery of the 1

9 equipment, some of the engineering work that has yet i

10 to be completsd projects to go beyond that date. We l

11 are trying to improve that date as much as possible.

12l C The reason for my question is several weeks or

( 13 approximately a month has passed since you were on thu () l 14 stand. I was wondering if there is any change in the l 15 status in TMI-l since that date?

16 A No, there has not been a significant change.

171 g- In the course of operating TMI-1, nr. Arnold, 1

1

( . i 18f prior to the accident, on a 'ay-to-day d basis, were 19 there NRC personnel present at Three Mile Island?

20" A Not each and every day. My recollection is the l

21j number of inspector days during 1978 averaged about I

22 25 to 30.

1 23, g

(

25 to 30 days?

( 74 A Per month. So we had about the equivalent of x 1

15l a person thera on a full-time basis, but it was 0

a:mmmi a r.inmu em.- w u. :.oe:m::.:.cw ar. - sammune. m. tma

Arnold - cross 2321 f

e- ;j.i.distributed crer a number of different inspectors who

- ;l 2 inspected different areas.

g 1

3 ;G so you would have several inspectors c,how up j i

,; together for a day or so and then leave? )

5 L That would be one type of visit we would have, ' I 6 yes.

7 o when NRc personnel were present at Three Mile l l 1

8 Island prior to the accident, did they play any role ,

l o in the operation of the unit or were they there merely 10 to observe?

11 L I guess I wouldn't categorise it in quite -

12 either of those two ways. They were there to observe A

Ms 13 operations and conduct of activities that were taking

4 place. They were there also to inspect the documenta ,

15 ti n that we are required to maintain no to how activities were being conducted at tima periods when '

16 .

they weren't there to observe them.

77 .,

18 O Sir, on March 28, 1979 were there any NRC I l

1[ personnel on the plant site at the time of the acci-d***?

20 -

A No, sir.

2L ,

MR. BARASCH: I have no further questions l ,J.

A ,

. ' of the witness. '

l g

I /- k

{,c y THE CHAIRMAN
I believe that then 1

"f.

25 neludes the parties' cross-examinationofMr. Arnold.{

i

==aanen zm=v.t. me. - = u. i e.m _:.ew .w - x.um=cas, n. im '

I

2522 -

i, If Is anything further scheduled? jA t J 2 IiR. S. RUSSELL: Not for this afternoon, ,!

a no. -

4 THE CHAIRMAN: Tomorrow we have 5 scheduled--

6 MR. S. RUSSELL: Mr. Cherry, Mr. Hafer, 7 and Mr. Graham, and if there is anything for Mr. Carter 8 he will also be available.

9 THE CHAIRMAN: All right, if there is 10 nothing further--

11 MR. BOWERS: Madam Chairman?

12 THE CHAIRMAN: I am sorry, Mr. Bowers.

13 MR. BOWERS: Madam Chairman, this O 14  : Commission's February 8 disposition of our petition 15 for reconsideration of its earlier prehearing order 16 was based at least in part upon e fi' ding n by the-17 Commission that the enforcement action which consisted -

18 f an assessment of the a: tent to which Metropolitan 19 Edison was not in compliance with NRC regulations and j g other guidelines in its technical specifications, tha*' l that inquiry was a continuing one, that it had not in i 31 '

g fact been concluded.

I g The e:cact words in the February 8 prs- j k 24 hearing order used by this Commission are "under active 23 consideration." Mr. Arnold's testimony indicates that I

== lfa8C:3ACM Jh StAMSM,J L*;C. = !ll:'IL LOC::72Ler M':7 - NAftFA:3EMG, PA. t7112 I

/

/-

l

__- 2520 .

d  !

'T -

1 I those matters are no longer under active considera-

~  ; f 2 ! tion, that the matter from a procedural standpoint at i

3- least is now closed. l

/f For this reason to the ertent to which  !

5 this Commission based its action in its Tebruary 8 6 prehearing order on that finding that the NRC 7 investigation was pending, was continuing, I would B renew my requast for reconsideration.

9 THE CHAIRMAN: Mr. Bowers, I will have 10 to tell you as we have to previous parties. Please put 11 the request in writing. We will not mche oral

, 12 determinations on the record upon oral requests. Okay?

D, 13 Thank you.

14' Commissioner Johnson, do you have a few 15 words of wisdom?

16 COMMISSIONER JOHNSON: I have some 17 questions which I want to address to the respondent 18 and t the parties. I must apologize to my colleagues 19 for not having shared th'se e questions with them earlier 20 this week. I expected that I would raise these

~

l '....

gy questions tomorrow.

22 In view f the fact that this session 23 is about to adjourn--is that correct?

/- -

%~'

34 THE CHAIRMAN: For today, until 23 tomorrow, 1 -

maxasaca e xansxA: twe.-nr rc. _ocarest.cw.wr.-maan:caunc. m.-tm:- t

. j l

2524 l1  !

t 1l C010!IS3IC;Ci:2 JC235CN: I would like to 2 h raise these qisstions. Mr. Russell, I think you t.

1 3 lawyers call this an effort in discovery. When last a 4 you had witnesses before us in these proceedings 5 representing the banks, Citibank and the other one 6 was the-- .

7l MR. S. RCSSELL: Chsmical.

8 CO!C!ISSIONER JO3NSON: Chemical, I 9 addressed soms questions to them, discussed with them 10 on the record their views of an effort that could be 11 undertaken by Meted to reduce the need for purchased 12 replacement power. I suggested that two ends would i 13 he served. one, naturally, would serve the overall lO

14. objectives of conservation te which the country is 13 committed and, secondly, it would serve the important 16', and, where Meted is concerned, of reducing the incrs-17 mental costs associated with purchased powsz, even l

13! though this commission has provided interim ralief to g i

19 Meted in the form of permitting 6.9 increas5 in millageI

, 20j in the energy cost rate.

21 Nevertheless, your Chart A-40 reveals n 1 that you will need more money even before we can sneeze.,

1 i

73 I hava some inquiries that I would like to put to ths  ;

t company for the record.

24 I would like to have from the l t

25 company at the time we meet after temorrow's session, t

I rJoscusACst a 32Ans?'",L.

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1 1

2525 U i

- , 1,.

f which would maan--

.1 2] TEE CHAIRMAN: March 11 would be our y 5 nert meeting date.

(

44 COMMISSIONER JOSESOM: By March 11.

5 First of all, ac you agree with the conclusion of your 6 banker friends who have testified here on the record 7 that they think it would be a capital idea for Meted 8 to'do anything it possibly could to reduce the need 9 for ertensive purchases of replacement power? That 10 is one thing. ..

11 MR. S. RUSSELL: Woll, I can answer thatt 12 now. .

Q 13 COMMISSIONER JOHHSON: No, give it to me 14 all at once. I can wait.

15 Secondly, what specific changes in the 16 rate structure have you considered or are you' consider-17 ing or would you consider in order to encourage meaning-gg  : ful residential, commercial, and industrial conservation 19 or shift in the usage from peak power to off-peak 20 periods? -

g, ,

21 What conclusions, if any, have you .

I gg reached concerning the relative costs and benefit of

,33 , each of these changes? With respect to residential

,c- l s,_ 2p consumers, I would like you to address the relative 25 merits of--and by the way, I am sorry that I am making I l ==u:n - u.: m - - u. -, m. - m= =m  :=

l

_ _ - _ . __ e_ . ,. .- . . ,

.I 2526 3 l 1 l Eq :n writa this out. I can give you a copy of what '

l 2 I am reading from and cave you all the troubis. f 1

3 {, HR. S. RUSSELL: That would be very l

4 helpful.

I

5. , COMMISSIONER JOHNSON: Inverted rates 6 for residential as a device to discourage greater l 7' usage and to encourage lesser utilization of power.

1 o The ir. mediate i=plementation of the 9 voluntary phase of the emergency energy plan filed at 10 EERD-3. I imagine the Secretary can provide you with I i

11: copies of that if you don't already have it.

12 Next, the accelerated promotion of time-('

\

13 of-day ral:es. SQ

. 14 Finally, advising the on- and off-peak 15 time-of-day rates to more closely resemble the dis-  ;

1 16 parity between on- anc1 off-peak rates while the TMI '

17 units are out of service.

18 Then there is cne final one. I note that l 19 the company has in its conservation plan which it 20 filed, it seeks permission of the Commission to extend, 21:

i

.go beyond the 1000 limit on the time-of-day utilization 22 of power. Instead of utilizing that mothed, I want 23! to get your reaction to the demand metar program

}

\

M currently in effect at Pennsylvania Power and West 25 Penn Power which while both have higher-than-average meansacx c. xusmu rue. - ar : . w.xve. teri .w. - muussuna, n. rma

.. . . _ _ _ . - , _ _ - - -~._ .---

I527 l 4 i i il l

r- 1q j'; rates have bills at 500, 1000, and 5000 kilowatts per -

l D

l <

2i month below the averages of the utilities in the e ,

i 1

5 state or in the area, the three-state area.

4' Nou, the Commission is generallv 5' concerned with maintaining the caveat we imposed in l 6g the June 15 order in which we said it is our desire l

71 to see to it that consumers, primarily residential l

8 } consumers, should not be worse off nor better off 9 than t; hey were before the TMI accident at Unit 2, 10 finding that it is very difficult if not impossible, f

f~ -

11- doing business as usual, to reach that kind of objec- i 12 tive.

{" 13 The last thing we would like to know or 14 I would like to know and I think the Commission would, 15 too,'is what sort of impact this would have upon your '

16 cash flow, and if you are going to say it would be 1j disastrous, I would want you to be prepared to demon-23 strate how that is the case.

19 Now, the last two questions you will 20 have to pick up from the Reporter in the transcript.

21 The others I have and can give you. I would appre-22 ciate also and I think the commission would if the psjeentestingpartieswouldconsidc these questions and  !

r- 1.

v 2 give us their advice on these matters if they so choose..

23 THE CHAIP.MAM: If there is nothing mennaam: o uansat me. - e =. i.c=rm:.:.=w wr. - namuzzuns, m.m is e l

ms--- .

2527A la 1lfurther, wo will adjourn today and me.st again j

i .

3 j' tomorrow at 10:00 a.m. j

. t 3 (Adjournment at 2:09 p.m.) l 1

~~-

f. .

5' 6

7 8

1 9

10 Reported by: Craig Windsor Wallace, R.P.R.

11 12 Transcribed by: James P. Gunning, III ,

14 15 16 17f 18 3 t

1F I i

201 21t 22 t .

l I

23 24j .

I 25' zo:me.cn s m..nsm . me.  ::. s.ee.:vn:.:.ew .ur. - ni.a. : n:: .c, =, m :::

A

3

! 8

- f 1 //? l

, :j! .

i

.,l l

I I hersby certify that the proceedings i 3

i e*

, and evidence are contained fully and accurately in j 1

the notes taken by me during the hearing of the 5 . ...  :

within cause, and that this is a true and correct 6

transcript of the same.

7 . .. . -. ..

l MOER3 ACE G MARSHAL, INC.

9l 1

- 1 I

By Ab .) A t Ilhfir t _ ~

11  ;

Cras.g Windsor Wallace, R.P.R.

12 C 13 ,i Dated: February 27, 1980 -- . ..-e. .... .

y - - .: -

l: .

15 .

16 (The foregoing certification of this i

]

g. tran.3cript does not apply to any reproduction of the gg sams by any means unless under the direct control 19 ,, and/or supervision of the certifying reporter.)

20 2L 0ll 22 t

23a e l m- 24l 25 s

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-m- g N NN aism.--., h, umanai-me e a w- .,

n-h e mi

  • O February 20, 1980 '

tw=d <sioner Michael Johnson .

I request a response en the record fran the Faepmht s to the ]

following questions:

1. mac em hanges c in rate structure have you con .

sidered in order to a1 courage resihHm', c-- '=1 and industrial ecnservation and/cr shift in usage fran peak periods to off-peak pM47

2. mat -,,, 4 m , if any have you ra=u cencerning the relative costs and benefits of each of those changes?
3. With respect to res4danHm1 custacers, address the reintive w e of:
a. hxverted rates ,
b. 4*4=ca inglemmtation of the voluntary phase of the -s==:y energy plan filed at EZRD #3
c. accelerated p tion of time,of day rates b,

i

)

d. revising the cn and off peak time of day rates to unre closely resechle the d4W between cm f and off peak rates d2ile. 'IMI units are out of ser- .

vice.

'4 C.~npany reaction to the demand meter program currently in effect at Penn Power and West Penn as alternative to extensics of time-of-day plan suggested as part of conservation plan. (N.T. 2526)

5. What impact "this" would have en cash flev vith demonstrative evidence ("this" apparently refers to implementation of demand meter program.) (N.T. 2527) l 3

l t

~ - -- ~ ~ - - __ _ ,____

--~-g , ,-