ML19317E808

Cities of High Point,Et Al Response to Applicant Motion for Protective Orders.Certificate of Svc Encl

ML19317E808
Person / Time
Site:	Oconee
Issue date:	07/30/1973
From:	Bouknight J TALLY, TALLY & BOUKNIGHT
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912180997
Download: ML19317E808 (8)

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UNITED STATES OF AMERICA BEFORE THE ATOMIC ENERGY COMMISSION In the Mat .er of )

DUKE POWER COMPANY Docket Nos. , 50-270A (Oct; nee Units 1, 2 & 3, ) 50-369A, 50-370A McGuire Units 1 & 2) )

ANSWER OF THE CITIES OF HIGH POINT, ET AL.

TO APPLICANT'S MOTION FOR PROTECTIVE ORDERS 4 To the Atomic Safety and Licensing Board:

The Cities of High Point, et al., (Cities), answering Applicant's Motion for Protective Orders, agree that documents that "do not evidence any anti-competitive action or intent on the part of Applicant" need not be disclosed if such disclosure might be injurious to Applicant. But Cities and Duke may differ completely on whether a particular document is helpful to Cities' case in this proceeding. Accordingly, Cities will respond to each of the five items as to which Applicant seeks protection. In each instance, Cities will suggest a practical solution which will protect 1

Applicant to the maximum extent compatible with protection of the legiti-mate interests of the Joint Discoverers.

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1. Pending Negotiations A stipulation that Applicant now actively seeks to acquire the three sys': ems mentioned would go far toward removing Cities' objections to a protective order pertaining to document pages 93,500 through 94,690.

The stipulation should contain a description of the facilities and the ,

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electric load to be acquired. Such a stipulation should suffice as to all transactions except those relating to facilities owned by the University of North Carolina at Chapel Hill, North Carolina (UNC-CH).

The UNC-CH system is a large electric distribution system the fate of which is now the subject of considerable controversy in North Carolina. A non-profit corporationi is pursuing a competitive effort to acquire the v...-CH facilities on behalf of certain political subdivisions local to the Chapel Hill area. Cities believe that acquisition by Duke of this large, now independent, distribution system would have a substan-tial and adverse effect on competition. To the extent that document pages 93,500-94,690 indicate only Duke's engineering and economic evalua-tions of the UNC-CH system, Cities have no objection to their non-disclosure.

But these documents may contain evidence that Duke has used, or plans to use, its present market power in wholesale and retail markets to increase its chances of succeeding in acquiring the UNC-CH system. For example, evidence that Duke is willing to pay more than a reasonable price for the facilities in order tp prevent their acquisition by a consumer-owned competitor might be admissible in this proceeding to illustrate Duke's monopolistic designs as to retail markets in the Carolinas.

Cities suggest that document pages 93,500 through 94,560 be produced for inspection by the Department of Justice and the AEC Sta ff only, with those parties directed by the Board not to disclose the contents of any such document, even to counsel for Cities, without prior permission from the Board. Disclosure to these two parties who are not

1. Which is represented by legal counsel for Cities in this proceeding.

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associated with any interests in North Carolina would protect Duke's interests and would assure that relevant evidence contained in the docu-ments would come to the attention of the Board.

2. Cost and Price Estimates As Cities explained by example in Item 1., above, the methodology for developing an offering price can sometimes be anti-competitive. Cities have no desire to discover Duke's formulas for estimating the value of physical electric facilities, but evidence that elimination of a competing distributor is a factor considered by Duke in fixing an offering price for an independent electric distribution system is important to this proceeding.

Conventional ratemaking, which classifies customers regardless of geograph-ical location and on a system-wide basis, permits a large, horizontally

' tegrated utility to absorb acquisition costs which might not have been incurred had the transaction been required to stand on its own economic merits. This permits Duke to pay more than facilities are worth in order to eliminate a competitor.2 Cities suggest an i_n_n camera inspection of documents 94,691 through 95,301 and 95,394 through 95,527 by the Board. This would assure that the interests of all parties are protected.

3. Future Plant Sites

Pre-emption of available generating sites is a most effective means of erecting barriers to the entry of competition. In two instances

2. Cities do not imply that Duke has done so; but, in explaining clearly why documents of a certain nature should not be excluded completelv from the discovery process, it is necessary to explain clearly why the documents may be relevant and important.

Duke's conduct in this regard can be questioned. The Trotter Shoals hydroelectric project, proposed by the Army Corps of Engineers, has been delayed and possibly prevented because Duke claimed that the proposed development would interfere with a generating plant planned by Duke for the same stretch of the Savannah River. Duke has opposed granting of

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a preliminary permit for EPIC's propos'ed Green River pumped storage project on the ground (among others) that Duke should be permitted to develop that segment of the Green River. Subsequently, Duke purchased a portion of EPIC's proposed site.

The Department of Justice and the AEC Staff should be permitted to examine document pages 95,526 through 95,639. This procedure will assure that any evidence of Duke's planning the location of future generating units in a manner calculated to prevent entry of competitors will be brought to the Board's attention. The Department of Justice and the Staff can be directed not to disclose the contents of the documents without prior permission of the Board. Thus Duke's concern about Cities' affiliation with EPIC and its desire to negotiate reasonable prices for the acquisition of rights of way should be satisfied.

4. Confidential Business Strategy Cities have no desire to discover the methodology by which Applicant will reimburse another system for lines owned by that system and flooded by Duke. The fourth document mentioned by Applicant goes to the very essence of this case. Duke now enjoys a monopoly in the supply of firm bulk power to Cities at wholesale. Cities have no bar-gaining position in regard to negotiation of future wholesale contracts other than possible recourse to the Federal Power Commission, so knowledge

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of Duke's " negotiating strategy" will make no difference "in normal business dealings with Applicant" so long as this monopoly continues.

Cities can only assume that Duke has devised a strategy to prevent the advent of EPIC. The strategy apparently will be implemented through conditions imposed by Duke in contracts with captive wholesale customers. It is inconceivable that this strategy -- whatever it is --

will not offend antitrust law and policy.

In this one instance, Duke's commercial interests must give way completely to the right of Cities to discover evidence relevant to the issues in this proceeding. The document described on page 7 of Applicant's motion is likely to contain powerful evidence of anti-competitive design. Duke should be ordered to produce it.

Cities have no objection to imposition of reasonable limita-tions on counsel's use of the document, provided that Cities may, after examining the document, request that the Board, in its discretion, modify or remove such limitations.

5. Particular Individuals Cities have no objection to the limitations requested by Applicant.

WHEREFORE, Cities request the Board to order that:

1) Document pages 93,500 through 94,690 be produced for inspection by the Department of Justice and AEC Staff only;

2) Document pages 94,b;l through 95,301 and 95,394 through 95,523 be produced for in camera inspection by the Board, and thereafter disclosed to extent ordered by the Board;

3) Document pages 95,524 through 95,139 be produced for inspection by the Department of Justice and AEC Staff only;

4) The document described on page 7 of Applicant's Motion be produced, subject to reasonable limitations on counsel's use of the document; and

5) The protective orders requested by Applicant as to document pages 95,307 through 95,393 be granted.

Respectfully submitted, TALLY, TALLY & BOUKNIGilT p 1 /? '

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f'lJ.A.Bouknight,Jr /

Post Office Drawer 1660 Fayetteville, North Carolina 28302 (919) 483-4175 and S 311, 429 N Street, S. W. l Washington, D. C. 20024 (202) 554-3835 Attorneys for High Point, Lexington, Monroe, Shelby, Albemarle, Landis and Lincolnton, North Carolina

• 30 July 1973 S

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O CERTIFICATE OF SERVICE I hereby certify that copies of the attached Answer, dated 30 July 1973, have been served on the following by deposit in the United States mail, first class or air mail, this 30th day of July, 1973.

Honorable Walter W. K. Bennett Troy B. Conner, Esquire Chairman, Atomic Safety and Reid & Priest Licensing Board 1701 K Street, N. W.

Post Office Box 185 Washington, D. C. 20006 Pinehurst, North Carolina 28374 Carl Horn, Esquire Honorable Joseph F. Tubridy President 4100 Cathedral Avenue, N. W. Duke Power Company Washington, D. C. 20016 P. O. Box 2178 Charlotte, N. C. 28201 Honorable John B. Farmakaides Atomic Safety and Licensing William H. Grigg, Esquire Board Panel Vice President and General Counsel Washington, D. C. 20545 Duke Power Company P. O. Box 2178 William Warfield Ross, Esquire Charlotte, N. C. 28201 George A. Avery, Esquire Keith Watson, Esquire W. L. Porter Toni K. Golden, Esquire Duke Power Company Wald, Harkrader & Ross P. O. Box 2178 1320 Nineteenth Street, N. W. Charlotte, N. C. 28201 Washington, D. C. 20036 Mr. Frank W. Karas, Chief Atomic Safety and Licensing Public Proceedings Branch Board Panel Office of the Secretary of the U.S. Atomic Er.argy Commission Commission Washington, D. C. 20545 U. S. Atomic Energy Commission Washington, D. C. 20545 Joseph Rutberg, Esquire Benjamin H. Vogler, Esquire Chairman, Atomic Safety and Antitrust Counsel for AEC Licensing Appeals Board Regulatory Staff '

U. S. Atomic Energy Commission U.S. Atomic Energy Commissicn Washington, D. C. 20545 Washington, D. C. 20545 Wallace E. Brand, Esquire Mr. Abraham Braitman, Chief Antitrust Division Office of Antitrust and Indemnity U.S. Department of Justice U.S. Atomic Energy Commission Post Office Box 7513 Washington, D. C. 20545 Washington, D. C. 20044

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