ML19312C626

Responds to AEC Request for Antitrust Advice.Advice in 710802,0929 & 730501 Ltrs Withdrawn.Antitrust Hearings Unnecessary & Should Be Terminated.Applicant 740426 Ltr & Statement of Commitments Encl

ML19312C626
Person / Time
Site:	Oconee, Mcguire, Catawba, McGuire
Issue date:	04/26/1974
From:	Kauper T JUSTICE, DEPT. OF, ATTORNEY GENERAL, OFFICE OF
To:	Shapar H US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912190824
Download: ML19312C626 (15)

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[cymiumd of justim p - 6 y 4. 2n53n April 26, 1974 Howard K. Shapar, Esquire Associate General Counsel U. S. Atomic Energy Commission Washington, D. C. 20545 Re: Duke Pcwer Comoany

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Oconee Units 1, 2 and 3, McGuire Nuclear Station Units 1 and 2, Catawba Nuclear Senr4 nn, Units 1 and 2; AEC Docket Nosmi30-269A, 270A, 287A, 369A, 370A, 413A and~41 W Deoartment of Justice File Nos. 60-415-27,

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Dear Mr. Shapar:

This constitutes a suoniemental letter of advice con-cerning the captioned nucl' ear power plant license applica-tions as to which our advice was requested by the Atomic Energy Ccmmission pursuant to the provisions of Section 105 of the Atomic Energy Act, as amended. In letters dated August 2,1971, September 29, 1971, and May 1, 1973, respectively, we recommended to the Commission that antitrust hearings be held on the Oconee, McGuire, and Catawba appli-cations.

As you know the consolidated hearing on the Oconee and McGuire auplications is scheduled to begin May 15, 1974.

In recent weeks, the parties to that proceeding have under-taken serious discussions concerning resolution of antitrust questions raised by the Oconee, McGuire and Catawba applica-tions. As a result of these discussions, the Applicant has informed the Department by letter of April 26, 1974, of its willingness to accept the statement of commitments enclosed in that letter as conditions to its licenses for the Oconee, McGuire and Catawba nuclear plants. Applicant's letter and the commitments are attached hereto. .

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e Given Applicant's undertaking to accept these commit-ments as license conditions, the Department now believes antitrust hearings will not be necessary with regard to the Oconee, McGuire and Catawba license aoplications. We there-fore withdraw our previous letters of~ advice concerning those three applications and recommend that appropricte steps be taken to terminate the scheduled antitrust proceedings thereon.

Sincerely yours, s

THOMAS E. KAUPER Assistant Attorney Ge.eral Antitrust Division s

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Duar POWER GoxPANY LEGAL DEPARTMENT P. O. Box 2178 GaAntoTTE, N. G. nas42 WILLIAM H, QRggg ao., u... m

<cc n.oi u .....,% co m Apri1 26, 1974 The Honorable Thomas E. Kauper Assistant Attorney General Antitrust Division Department of Justice Room 3109 Washington, D. C. 20530 Re: Oconee Nuclear Station (Units 1, 2 & 3), AEC Docket Nos. 50-269A, 50-270A, 50-287A; McGuire Nuclear Station, (Units 1 & 2), AEC Docket Nos. 50-369A and 50-370A; Catawba Nuclear Station, (Units 1 & 2), AEC Docket Nos. 50-413A and 50-414A.

Dear Mr. Kauper:

I enclose herewith a Statement of Commitments on behalf of Duke Power Company. The statement of these

commitments reflecting Duke's policies is the product of recent discussions with attorneys of the Antitrust Division and of the Atomic Energy Commission staff.

In AEC licensing proceedings involving the Oconee, McGuire and Catawba plants, the Department of Justice is contending that activities under these licenses would maintain a situation inconsistent with the antitrust laws. Duke Power Company has denied, and continues to deny, all of the allegations made by the Department of Justice, the AEC staff, and the intervenors in those proceedings in support of the claimed need for license anditions, and Duke reserves the right to assert such denial in these proceedings or in any other proceeding or forum. Specifically, Duke denies that a situation inconsistent with the antitrust laws would be maintained or would be created by the issuance of licenses for the Oconee, McGuire or Catawba plants. Duke further denies that any conditions to the licenses are necessary.

Page 2 The Honorable Thomas E. Kauper However, Duke feels that it is in the public interest, and in Duke's own interest, to terminate these proceedings promptly so that licenses for these plants, particularly the Catawba plant, can be issued without delay. Duke has been informed that the Department of Justice is willing to withdraw its recommendation that hearings be held on the need for antitrust related con-ditions if the attached commitments stating Duke's policies are made conditions to the Oconee, McGuire and Catawba licenses.

Accordingly, Duke is willing to accept these commitments as conditions to the licenses to be issued by the Atomic Energy Commission for Duke's Oconee, McGuire, and Catawba plants. Duke reserves the right to oppose the imposition of any different or additional conditions. All of the commitments made by Duke are contained in the attachment to this letter.

Sincerely yours, f.

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• W' liam H. Grigg WHG:cd o

ATTACHMENT TO LETTER DATED APRIL 26, 1974 FROM WILLIAM H. GRIGG TO THOMAS E. KAUPER STATEMENT 07 COMMITMENTS Applicant makes the commitments contained herein, recognizing that bulk power supply arrangements between neighboring entities normally tend to serve the public interest.

In addition, where there are net benefits to all participants, such arrangements also serve the best interests of each of the participants. Among the benefits of such transactions are increased electric system reliability, a reduction in the cost of electric power, and minimization of the environmental effects of the production and sale of electricity.

Any particular bulk power supply transaction may afford greater benefits to one participant Ehan to another.

The benefits realized by a small system may be proportionately greater than those realized by a larger system. The relative benefits to be derived by the parties from a proposed trans-action, however, should not be controlling upon a decision with respect to the desirability of participating in the transaction. Accordingly, Applicant will enter into proposed bulk power transactions of the types hereinafter described which, on balance, provide net benefits to Applicant. There are net benefits in a transaction if Applicant recovers the cost of the transaction (as defined in 11(d) hereof) and them is no i

demonstrable net detriment to Apolicant arising from that l ' transaction.

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1. As used herein:

(a) " Bulk Power" means electric power and any attendant energy, supplied or made available at transmission or sub-transmission voltage by one electric system to another.

(b) " Neighboring Entity" means a private or public corporation, a governmental agency or authority, a municipality, a cooperative, or a lawful associa-tion of any of the foregoing owning or operating, or proposing to own or operate, facilities for the generation and transmission of electricity which meets each of the following criteria: (1) its existing or proposed facilities are economically and technically feasible of interconnection with those of the Applicant and (2) with the exception of municipalities, cooperatives, governmental agencies or authorities, and associations,it is, or upon commencement of opera-tions will be, a public utility and subject to regula-tion with respect to rates and service under the laws of North Carolina or South Carolina or under l l

the Federal Power Act; provided, however, that as to j i

associations, each member of such association is either a public utility as discussed in this clause (2) or a municipality, a cooperative or a govern-mental agency or authority.

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i (c) Where the phrase " neighboring entity" is intended t

to include entities engaging or proposing to engage only in the distribution of electricity, this is indicated by adding the phrase " including distribution systems."

(d) " Cost" means any appropriate operating and maintenance expenses, together with all other costs, including a reasonable return on Applicant's invest-ment, which are reasonably allocable to a transaction.

However, no value shall be included for loss of revenues due to the loss of any wholesale or retail customer as a result of any transaction hereafter described.

2. (a) Applicant will interconnect and coordinate re-serves by means of the sale and exchange of emergency and scheduled maintenance bulk power with any neighboring entity (ies) , when there are net benefits to each party, on terms that will provide for all of Applicant's properly assignable costs as may be determined by the Federal Power Commission and con-sistent with such cost assignment will allow the other party the fullest possible benefits of such coordination.

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(b) Emergency service and/or scheduled maintenance service to be provided by each party will be furnished to the fullest extent available from the supplying party and desired by the party in need.

Applicant and each party will provide to the other emergency service and/or scheduled maintenance service if and when available from its own generation and, in accordance with reco'gnized industry practice, from generation of others to the extent it can do so without impairing service to its customers, including other electric systems to whom it has firm commit-ments. ,

1 (c) Each party to a reserve coordination arrange-ment will establish its own reserve criteria, but in no event shall the minimum installed reserve on each system be less than 15%, calculated as a percentage of estimated peak load responsibility. Either party, )

if it has, or has firmly planned, installed reserves in excess of the amount called for by its own reserve criterion, will offer any such excess as may in fact be available at the time for which it is sought and for such 1

period as the selling party shall determine for purchase l l in accordance with reasonable industry practice by the other party to meet such other party's own reserve require-l ment. The parties will provide such amounts of spinning re- i

! serve as may be adequate to avoid the imposition of unreason-l able demands on the' other party (ies) in meeting the

normal contingencies of operating its (their) system (s) . However, in no circumstances shall such spinning reserve requirement exceed the installed reserve requirement.

(d) Interconnections will not be limited to low voltages when higher voltages are available from Applicant's installed facilities in the area where interconnection is desired and when the proposed arrangement is found to be technically and economically feasible.

(e) Interconnection and reserve coordination i

agreements will not embody provisions which impose limitations upon the use or resale of power and energy sold or exchanged pursuant to the agreement.

Further, such arrangements will not prohibit the participants from entering into other interconnection I and coordination arrangements, but may include i

appropriate provisions to assure that (i) Applicant receives adequate notice of such additional inter- )

l connection or coordination, (ii) the parties will I i

jointly consider and agree upon such .neasures, if

.any, as are reasonably necessary to protect the relia-bility of the interconnected systems and to~ prevent undue burdens from being imposed on any system, and 1

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(iii) Applicant will be fully compensated for its costs. Reasoncble industry practice as developed in the area from time to time will satisfy this provision.

3. Applicant currently has on file, and may hereafter file, with the Federal Power Commission contracts with neighboring entity (ies) providing for the sale and exchange of short-term power and energy, limited term power and energy, economy energy, non-displace-ment energy, and emergency capacity and energy.

Applicant will enter into contracts providing for the same or for like transacticns with any neighboring entity on terms which enable Applicant to recover the full costs allocable to such transaction.

4. Applicant currently sells capacity and energy in bulk on a full requirements basis to several entities engaging in the distribution of electric power at re-tail. In addition, Applicant supplies electricity directly to ultimate users in a number of municipalities.

Should any such entity (ies) or municipality (ies) desire to become a neighboring entity as defined in Paragraph 1(b) hereof (either alone or through combination with others), Applicant will assist in facilitating the L

necessary transition through the sale of partial requirements firm power and energy to the extent that, except for such transition, Applicant would otherwise be supplying firm power and energy. The provision of such firm partial requirements service shall be under such rates, terms and conditions as shall be found by the Federal Power Commission to provide for the recovery of Applicant's costs.

Applicant will sell capacity and energy in bulk on a full requirements basis to any municipality currently served by Appligant when such municipality lawfully engages in the distribution of electric power at retail.

5. (a) Applicant will facilitiate the exchange of electric power in bulk in wholesale transactions over its trans-mission facilities (1) between or among two or more neighboring entities including distribution systems with which it is interconnected or may be interconnected in the future, and (I) between any such entity (ies) and any other electric system engaging in bulk power supply between whose facilities Applicant's transmission lines and other transmission lines would form a continuous

. electric path, provided that permission to utilize such other transmission lines has been obtained. Such transaction shall be undertaken provided that the i

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particular transaction reasonably can be accom-modated by Applicant's transmission system from a functional and technical standpoint and does not constitute the wheeling of power to a retail customer.

Such transmission shall be on terms that fully compensate Applicant for its cost. Any entity (ies) requesting such transmission arrangements shall give reasonable notice of its (theid schedule and require-ments.

(b) Applicant will include in its planning and construction program sufficient transmission capacity as required for the transactions referred to in sub-paragraph (a) of this paragraph, provided that (1) the neighboring entity (ies) gives Applicant suffi-cient advance notice as may be necessary reasonably to accomradate its (their) requirements from a functional and technical standpoint and (2) that such entity (ies) fully compensates Applicant for its cost. In carrying out this subparagraph (b), however, Applicant shall not be required to construct or add transmission facilities which (a) will be of no

, demonstrable present or future benefit to Applicant, or (b) which could be constructed by the requesting entity (ies) without duplicating any portion of

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Applicant's existing transmission lines, or (c)

which would jeopardize Applicant's ability to finance or construct on reasonable terms facilities needed c

to meet its own anticipated system requirements.

Where regulatory or environmental approvals are required for the construction or addition of trans-mission facilities, needed for the transactions referred to in subparagraph (a) of this paragraph, it shall be the responsibility of the entity (ies) seeking the transaction to participate in obtaining such approvals, including sharing in the cost thereof.

6. To increase the possibility of achieving greater reliability and economy of electric generation and transmission facilities, Applicant will discuss load projections and system development plans with any neighboring entity (ies) .

7. When Applicant's plans for future nuclear generating units (for which application will hereafter be made to the Atomic Energy Commission) have reached the stage of serious planning, but before firm decisions have been made as to the size and desired completion

. date of the proposed nuclear units , Applicant will i notify all neighboring, entities including distribution systems with peak loads smaller than Applicant's l

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that Applicant plans to construct such nuclear units. Neither the timing nor the information provided need be such as to jeopardize obtaining the required site at the lowest possible cost.

8. The foregoing commitments shall be implemented in a manner consistent with the provisions of the Federal Power Act and all other lawful local, state and Federal regulation and authority. Nothing in these commitments is intended to determine in advance the resolution of issues which are properly raised at the Federal Power Commission concerning such commitments, including allocation of costs or the rates to be charged. Applicant will negotiate (including the execution of a contingent statement of intent) with respect to the foregoing commit-ments with any neighboring entity including dis-tribution systems where applicable engaging in or proposing to engage in bulk power supply trans-actions, but Applicant shall not be required to enter into any final arrangement prior to-resolu-tion of any substantial questions as to the law-ful authority of an entity to engage in  ;

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, the transactions. In addition,' Applicant shall not be obligated to enter into a given bulk power supply transaction if: (1) to do so would violate, or incapacitate it from performing, any existing lawful contracts it has with a third party; (2) there is contemporaneously available to it a competing or alternative arrangement which affords it greater benefits which would be mutually exclusive of such arrangement; (3) 'to do so would adversely affect its system operations or the reliability of power supply to its customers, or (4) if to do so would jeopardize Applicant's ability to finance or construct on reasonable terms facilities needed to meet its own anticipated system requirements.

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